Another Side of the XRP Ruling: Was There a Concealed Error?

Delving into the XRP lawsuit's Summary Judgment reveals an opportunity for unravelling potential within the United States (US). In a pivotal moment last month, Judge Analisa Torres delivered a significant ruling, debunking the US Securities and Exchange Commission's (SEC) claims of illegal securities sales concerning Ripple's XRP token.

The judge distinguished the sales to retail buyers from those to institutional buyers, determining that the former do not qualify as securities transactions, while the latter still fall under the securities umbrella. The SEC has taken a firm stance and announced its intention to appeal the ruling that exonerated Ripple's XRP sales from violating securities laws. The regulatory body contends that the judge overseeing the case made a significant error in judgment.

Just last week, SEC Chair Gary Gensler had avoided divulging the agency's forthcoming actions following Judge Analisa’s Summary Judgment favouring Ripple in the XRP Vs SEC lawsuit. It is worth noting that Gary had expressed his disappointment regarding the XRP ruling earlier.

During a fireside chat at the World Blockchain Summit 2023 held in Singapore between 2 to 3 August, one of the topics covered was “Women in Blockchain: Pioneering the Future of Decentralised Technologies". Fiona Murray, Head of APAC Sales at Ripple, and Sonny Mohanty, VP APAC at Nordek addressed the issue of how can the blockchain space address the scarcity of female workers when so few women are actively involved in crypto and blockchain at a foundational level.

Sonny commented that Ripple has been in the news lately and enquired about the regulatory aspect. Fiona exclaimed that exciting regulatory developments are in motion, and they are thrilled to share the news. Ripple has also received in-principle approval for the Major Payment Institution (MPI) licence, a significant milestone that reinforces their commitment to long-term success.

“We've had a very, very public fight with the SEC, who sued Ripple around XRP. And we are really delighted, actually, to hear that the court has found in our favor and that XRP is not a security as a matter of law.”

This landmark decision brings the US closer to achieving much-needed regulatory clarity and fairness in the digital asset space—an aspect we've diligently embraced alongside reputable regulators in other countries. Fiona felt that with the path toward global regulatory cohesion becoming clearer, they hold optimistic expectations for a positive shift in the US regulatory landscape as well.

However, with such a complex ruling, there are numerous dimensions that warrant closer examination and deeper inquiry.

Questioning the Classification of Retail Token Sales as Securities
Southern District of New York Judge Jed Rakoff has challenged Judge Analisa' ruling, granting the SEC permission to press on with its lawsuit against Terraform Labs and its founder, Do Kwon. This pivotal decision essentially sets aside the notion that retail token sales should not be considered securities. As the legal drama continues, attorney Bill Morgan has entered the fray, raising important questions about Ripple's on-demand liquidity (ODL) linked sales — a matter that had previously caught the attention of the company's chief technology officer, David Schwartz.

An intriguing question arises: Can the Ripple ODL sales be convincingly classified as securities, considering that institutional clients hold XRP tokens for mere seconds? The mechanics of Ripple's ODL transactions are fascinating, with customers briefly holding XRP to facilitate swift cross-border payments. It appears that in these instances, XRP serves primarily as a means of payment, rather than an investment vehicle. But does this distinction hold up under regulatory scrutiny?

“Still waiting for the day someone in the XRP community justifies the Torres decision for lumping sales to ODL customers with institutional sales on any reasoning consistent with Howey principles,” Bill expressed.

If crypto can be securities when sold to the general public, then that add more uncertainty and murkiness as to how the industry will be regulated. How then will regulators navigate the fine line between utility and investment in this evolving digital asset ecosystem?

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US judge Jed Rakoff said cryptocurrencies can be securities when sold to the general public, adding more murkiness to how the industry will be regulated.#financialfreedom#dividends#investingtips#thefinancenerd#stockstowatch#fyp#cryptomarket
— Peter Lopez (@PLo_trades) August 2, 2023
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