According to court documents, the United States Securities and Exchange Commission (SEC) is contemplating the possibility of appealing a recent ruling in the case against Ripple Labs. This ruling declared that XRP was not a security when sold to retail investors, which the SEC contends goes against fundamental securities laws principles, including the Howey test that determines investment contracts.
The SEC's recent remarks on the Ripple Labs lawsuit were made during a separate lawsuit against Terraform Labs and its founder, Do Kwon, for allegedly orchestrating a multi-billion dollar crypto asset securities fraud.
In response to Terraform Labs' motion to dismiss, which referenced the Ripple Labs ruling, the SEC highlighted several issues it has with the court's decision on XRP. The SEC believes that certain parts of the Ripple ruling support their claims in this case, but they disagree with its conclusions on Programmatic and other sales, stating that Ripple introduces baseless requirements to the Howey test and its related principles. The SEC is now considering various options for further review and intends to recommend seeking such review.
These statements from the SEC come shortly after its Chair, Gary Gensler, expressed disappointment with the court's ruling that XRP is not a security when sold to retail investors. While the court recognized that XRP could be considered a security for institutional investors, it disagreed on its classification for retail investors. Gensler mentioned that they are still evaluating this aspect of the ruling and considering potential actions.
During a July 17 interview with Yahoo Finance, Gensler stated that they were pleased with the court's recognition of XRP as a security for institutional investors but were disappointed with the other aspect concerning retail investors. He also appeared at the National Press Club on the same day to discuss artificial intelligence, where he was questioned about the need for clear regulations in the industry, likely in response to the court rulings.
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