According to Bloomberg, the US SEC yesterday announced that a federal judge erred in ruling against the institution in a landmark crypto case last week, signaling it will appeal the decision. In response to the court’s decision, the SEC allegedly claims that the court erred in deciding to dismiss the case. The agency said the court did not consider the evidence presented by the SEC and did not properly apply the law. The SEC also claims that the court did not take into account the potential damage to investors if Ripple Labs is allowed to continue operating without registering the XRP token as a security. However, on May 16, the community applauded when US District Judge Analysis Torres sided with Ripple Labs that nearly half of XRP sales did not violate investor protection laws. Torres’ decision has given hope to other defendants who are fighting the SEC over the sale of cryptocurrencies, which the SEC says are often illegally traded securities.
Recall that we are talking about the fact that the US Securities and Exchange Commission (SEC) filed a response to the court decision in the case of Terra Exchange LLC against Ripple Labs Inc. July 21, 2023. The SEC has been investigating Ripple Labs since late 2020, alleging that the company and its executives violated securities laws by selling unregistered securities.
However, SEC lawyers last week preliminarily considered an appeal that could potentially set aside part of the case against Ripple Labs, while focusing on precedents in separate lawsuits against the creators of TerraUSD and Luna Do Kwon and Terraform Labs, respectively.
Do Kwon, the jailed co-founder of crypto firm Terraform Labs, is one of the defendants trying to use Torres’ decision to dismiss the SEC lawsuit. The agency charged Kwon with fraud and other violations of the law in a complaint filed in federal court in Manhattan in February. In its filing, the SEC wrote that the judge in Kwon’s case should not cite the Ripple case as a precedent. The SEC said Torres’ decision “adds unsubstantiated claims” to testing when the asset is a security. The agency plans to seek “further review,” which could mean an appeal.