SEC to Signals Intent to Appeal Ripple Ruling After Do Kwon's Defense

The United States Securities and Exchange Commission (SEC) has indicated its intention to appeal the recent groundbreaking ruling in the lawsuit against Ripple.

This ruling granted the cryptocurrency firm a significant victory and set a new precedent for the classification of cryptocurrencies as securities.

The SEC's decision to challenge the ruling came to light during its latest filing in a separate lawsuit involving Do Kwon and Terraform Labs.

The defense for Terra and Do Kwon emphasized the differentiation between programmatic sales of digital assets, which are not categorized as securities, and institutional sales, which are considered securities under investment contracts, following the "Torres Doctrine."

Moreover, Terra and Do Kwon's legal team asserted that the SEC had not accused them of any direct or secondary market sales of UST.

They filed a supplemental authority citing the Ripple judgment in an attempt to dismiss the SEC's case, which accused Terra and its founder of fraud and violating securities regulations.

Judge Analisa Torres' recent summary judgment motion recognized XRP's institutional sales as securities offerings but determined that retail or programmatic sales of XRP did not constitute an investment contract.

This ruling played a pivotal role in Do Kwon's defense, who cited it in a motion to dismiss the SEC's lawsuit against him and his firm.

According to a report by Bloomberg, the SEC advised the judge presiding over the lawsuit against Do Kwon and Terraform Labs not to consider the Ripple ruling as a legal precedent.

The securities regulator argued that Judge Torres' distinction between the expectations of sophisticated institutional and retail investors in relation to XRP's programmatic sales was artificial.

The SEC further contended that the Ripple ruling introduced "baseless requirements" into the long-standing Howey Test, a crucial tool in determining whether an asset qualifies as a security.

The SEC's filing also shed light on the stance it wished to uphold regarding the components of the Ripple ruling pertaining to XRP's non-security status for retail sales.

Simultaneously, the SEC stated that it was contemplating appealing the contentious ruling by Judge Torres.

Interestingly, the securities regulator encouraged the judge overseeing the Terraform case to consider Judge Torres' view on institutional sales of XRP, which were deemed securities.