SEC Tags XRP A Security in Lawsuit Against Ripple
The Securities and Exchange Commission formally appealed its decision to classify cryptocurrency XRP as a security in its ongoing lawsuit against Ripple. The SEC argued against the earlier decision in favor of Ripple in a brief filed on Wednesday.
According to the District Court for the Southern District, some XRP sales to individual investors were lawful under securities regulations.
The district court’s division between institutional and retail investors is contested in the appeal.
The financial watchdog contended that the district court’s differentiation between institutional and retail investors’ expectations is incompatible with the Howey test’s objective investor standard.
They also said it violates a core tenet of federal securities laws, which states that less experienced investors should be protected equally with more experienced ones.
The agency went on to say, “The district court incorrectly concluded that retail investors did not have that same expectation because they bought XRP through cryptocurrency asset trading platforms and didn’t know if the seller was Ripple, a Ripple affiliate, or someone else.”. the SEC claims that all sales of XRP are unregistered securities. Should they prevail, the matter will return to the district court in an attempt to overturn the court’s decision in favor of Ripple.
There are rumors that the Trump administration may change its position on crypto regulation amid this legal tumult. According to reports, there may be a pause in enforcement actions, which could result in speedier settlements and a move away from “regulation by enforcement.”.
Gary Gensler, the current secretary chair, is scheduled to retire next week, so the new administration is anticipated to provide greater clarity and assistance to the cryptocurrency sector.
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