Key takeaways:
- Legal battle between SEC and Ripple Labs continues.
- SEC’s recent comments on Ripple Labs lawsuit made in separate lawsuit against Terraform Labs and its founder, Do Kwon.
- Terraform Labs accused of “orchestrating a multi-billion dollar crypto asset securities fraud.”
The legal battle between the U.S. Securities and Exchange Commission (SEC) and Ripple Labs Inc. have taken a new turn, as the regulatory agency has hinted at the possibility of appealing the recent ruling concerning the status of XRP.
The ongoing lawsuit has significant implications for the cryptocurrency industry, with both sides vying for a favorable outcome that could shape the regulatory landscape for digital assets.
In the latest development regarding the legal battle between the U.S. Securities and Exchange Commission (SEC) and Terraform Labs, the regulatory agency, have expressed their concerns over the court’s recent decision in the Ripple Labs lawsuit.
The SEC’s comments were made in response to a motion to dismiss filed by Terraform Labs and its founder, Do Kwon, who are facing allegations of orchestrating a multi-billion dollar crypto asset securities fraud.
In its response filed on July 21, the SEC referenced the precedent-setting Ripple Labs ruling while outlining several issues it holds against the court’s decision on XRP.
The SEC’s stance indicates the agency’s intention to use the Ripple Labs case as a reference point in its pursuit of enforcing securities laws in the broader cryptocurrency industry.
In a recent filing to Judge Jed Rakoff of the U.S. District Court for the Southern District of New York, SEC lawyers respectfully expressed their disagreement with certain aspects of the previous Ripple case rulings.
They argued that those particular portions of the Ripple case were decided erroneously and, therefore, should not be followed in this current case against Terraform Labs and its former CEO, Do Kwon.
The SEC lawyers further stated that the agency’s staff is actively considering different options for further review of the Ripple case.
They intend to recommend that the SEC pursue such review, indicating the agency’s determination to address the legal implications and potential precedents set by the Ripple case in the context of the Terraform Labs lawsuit.
The SEC also claims that it “improperly transforms” the Howey criteria, a decades-old criteria for evaluating whether assets are securities, into a subjective norm. The agency requested that the court overturn that portion of the decision.
The SEC’s comments came only days after the agency’s Chair, Gary Gensler, voiced his dissatisfaction that the court ruled that XRP is not a security when offered to ordinary investors.
