SEC asked the judge to ignore part of a recent decision in a lawsuit against Ripple because it does not comply with applicable securities laws and is subject to appeal. It is reported by Bloomberg.
The regulator filed a lawsuit against Ripple in 2020, accusing the company of distributing about $1.3 billion worth of unregistered securities in the form of the platform’s native tokens. On July 13, 2023, Judge Analisa Torres ruled that selling XRP directly to institutional investors violated SEC rules, but offerings to retail investors on exchanges did not.
In an updated lawsuit against Terraform Labs and its CEO Do Kwon, the agency said the verdict “creates an artificial distinction between the expectations of institutional and retail investors.” According to the regulator, the ruling “erroneously transforms” a decades-old howey test to a subjective standard. The SEC asked the court not to consider the decision in the Ripple case and made it clear that it was considering filing an appeal.
The Commission’s comment comes after Terraform Labs and Kwon’s lawyers filed a statement citing the Ripple decision as supporting their motion to dismiss the regulator’s lawsuit. According to lawyers, Judge Torres’ ruling “confirms the legal invalidity of the SEC’s assertion” that some tokens, including the TerraUSD stablecoin, were securities due to the way they were sold.
The regulator in February charged Terraform Labs and Kwon with running a multi-billion dollar fraud.
SEC representatives also told the judge that the decision on Ripple in terms of large investors works in favor of the agency’s position.
“Institutional buyers, such as trading firms, who purchased the defendants’ crypto assets without resale restrictions, bought them because they saw it as an opportunity to invest in the efforts of Terraform Labs,” the agency noted.
Recall that former SEC lawyer John Reed Stark called the court verdict in the Ripple case “shaky” and noted the high chances of a successful appeal.
Found a mistake in the text? Select it and press CTRL+ENTER
ForkLog Newsletters: Keep your finger on the pulse of the bitcoin industry!
.