The US Securities and Exchange Commission (SEC) has a deadline of October 7 to appeal Judge Analisa Torres’s ruling that XRP secondary sales are non-securities. Judge Torres’s landmark ruling in July 2023 marked a major development in the years-long tussle between Ripple and the US securities regulator.
This ruling also marked a pivotal point in the digital asset industry. It set a legal precedent that has shaped the legal strategies used by other entities being sued by the SEC, including Binance.
For instance, in June, US District Judge Amy Berman Jackson dismissed claims by the SEC that the secondary sales of BNB tokens qualified as securities. Judge Jackson used Judge Torres’ ruling to form the basis of his judgment.
An Appeal is Still Likely
According to Fox Business, it remains likely that the SEC will appeal this decision as the regulatory agency seeks to take control of the cryptocurrency industry.
“I believe the SEC will appeal. I would think it would not want to have the programmatic trading analysis stand. It creates inconsistency in rulings by district court judges and in the Second Circuit,” said one of the sources who spoke to Fox Business.
The ruling by Judge Torres last year resulted in Ripple being slammed with a $125M fine for XRP institutional sales. However, Ripple has yet to pay this fine. Instead, the company requested a stay on paying the fine, leading to speculation that it could be getting ready for an appeal by the SEC.
Congress Criticises Gensler
The US Congress has been scrutinizing the conduct of the SEC, under the leadership of its Chair, Gary Gensler, towards digital assets.
US Representative Ritchie Torres has criticized Gensler for his understanding of tokenization and for applying the Howey test in the crypto industry. In an X post, the Congressman stated that Gensler contradicted the Supreme Court’s reasoning on Howey.
“SEC Chair Gary Gensler seems to believe that the process of tokenization magically transforms a collectible like a Pokemon card into a security,” Torres stated. “In the Howey case, the Supreme Court held that what matters is not the form but the substance—the economic reality—of a transaction.”
SEC Chair Gary Gensler seems to believe that the process of tokenization magically transforms a collectible like a Pokemon card into a security.
In the Howey case, the Supreme Court held that what matters is not the form but the substance—the economic reality—of a transaction.… pic.twitter.com/XQSDGI5Frk
— Rep. Ritchie Torres (@RepRitchie) September 30, 2024
House Majority Whip Tom Emmer has criticized the SEC’s approach to cryptocurrencies. Emmer noted that whatever Gensler was doing in the US was fighting against cryptocurrency innovation and pushing crypto businesses outside the US.
As ZyCrypto reported, the SEC recently postponed the decision to allow options trading for BlackRock’s Ethereum exchange-traded funds (ETFs) despite approving similar products for Bitcoin.
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