Is the SEC Planning to Appeal XRP’s Status? The Future of Ripple Remains Uncertain
The legal dispute between Ripple and the SEC is escalating by the day, with the controversial Howey test at the center of the controversy. Ripple’s fate hangs in the balance once again. Stuart Alderoty, Ripple’s Chief Legal Officer, recently drew attention to an important aspect of Judge Analisa Torres’ remarks regarding the SEC’s application of the Howey test to cryptocurrency assets.
The Howey test is a legal framework used to determine whether a transaction qualifies as an “investment contract” and thus falls under securities laws.
During a heated discussion, Alderoty highlighted Judge Torres’ criticism, emphasizing her recognition that the SEC’s broad interpretation of the Howey test deviates from its original purpose. Judge Torres pointed out inconsistencies where promoters made explicit promises to investors about a well-defined business venture.
This discussion came to light following a recent ruling involving Coinbase. U.S. District Judge Katherine Polk Failla allowed the SEC’s lawsuit against Coinbase to proceed, although Coinbase did win some parts of the case.
Delving into the details, Alderoty discussed Failla’s ruling, specifically highlighting a section that explores various interpretations of a crypto “ecosystem.” He emphasized the SEC’s claim that purchasing any token implies investing in this undefined “ecosystem,” regardless of the buyer’s specific intentions.
Interestingly, this observation aligns with what Judge Torres stated in the Ripple-SEC case, where she meticulously reviewed the evidence and concluded that the SEC had veered significantly from the intended purpose of the Howey test. This shift in direction was particularly evident when promoters did not explicitly promise investors a concrete business venture.
The question arises as to whether the SEC could change its stance and appeal the security status of XRP, despite their previous statement of not doing so. Ernesto Kapiris raised this question in a post, with many doubting if the SEC would alter its position and appeal in the future. If the SEC were to shift its position and appeal, Ripple may have arguments to present.
In response to the user, Bill Morgan suggests that the SEC’s ultimate goal may not be to challenge the determination that cryptocurrencies like XRP are not securities. Instead, they may seek a broader ruling that states cryptocurrencies themselves are not securities, but any sale of them constitutes an investment contract. This implies that even if a cryptocurrency does not inherently possess value, buying and selling it could still be considered an investment.
With the validity of the much-debated Howey test in question, the only cryptocurrency with a legal status finds itself tangled in yet another predicament. Experts believe that this may have implications for the future price of the cryptocurrency.
Tags: Ripple (XRP)