The cryptocurrency world is buzzing with commentary on the recent Coinbase hearing, where the SEC’s remarks reignited the Ripple lawsuit battleground.
SEC Criticizes Torres Ruling
In a tweet highlighting the hearing, journalist Eleanor Terrett reported the SEC criticizing Judge Torres’s decision in the Ripple case. The crux of the criticism boils down to the judge’s distinction between Ripple’s programmatic sales on exchanges (not deemed securities) and institutional sales (deemed securities). The SEC argues that regardless of investor sophistication, buying the same token should fall under the same securities laws.
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The SEC lawyer just brought up Judge Torres’s ruling in the @Ripple case:
“Where we disagree with Judge Torres is that there’s no need to create two categories of people because whether you’re sophisticated or not, at the end of the day, you’re still buying the same token.”…
— Eleanor Terrett (@EleanorTerrett) January 17, 2024
Deaton Weighs In XRP community attorney John Deaton countered by pointing out that Torres followed the SEC’s complaint, which categorized Ripple’s sales into different buckets. He noted that the SEC argued institutional sales constituted securities while programmatic and other distributions (giveaways, donations, etc.) did not. Deaton emphasized that Torres merely ruled by the agency’s arguments.
What Judge Torres did was follow the Complaint and the argument made by the SEC. The SEC divided Ripple’s sales of XRP into several categories: 1) institutional sales to sophisticated investors like Banks, Hedge Funds, VC’s, etc; 2) programmatic sales through exchanges: and 3)… https://t.co/tDO7Cgqxv0
— John E Deaton (@JohnEDeaton1) January 17, 2024
Terra Judge Sides with SEC
Adding fuel to the fire, Judge Rakoff, who presided over the SEC’s lawsuit against Terraform Labs, echoed the SEC’s criticism. He disagreed with Torres’s distinction between investor types, stating that the Howey test doesn’t differentiate based on coin origin. This further validates the SEC’s stance challenging Torres’s ruling.
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Appeals on the Horizon?
The SEC’s arguments in the Coinbase hearing suggest a potential appeal of the Ripple decision once Torres issues her final judgment. They’re pushing for additional financial disclosures from Ripple related to its institutional sales data. With discovery nearing its end, a final decision could come as early as summer.
Ripple Awaits Final Judgment
Ripple is preparing its response to the SEC’s latest motion and awaiting the final judgment. Whether the SEC chooses to appeal or seek a settlement remains to be seen, but the recent developments indicate a potentially long and contentious legal battle ahead.