SEC Appeal Unlikely to Impact XRP, Crypto Lawyer Says
SEC Appeal Unlikely to Impact XRP, Crypto Lawyer Says
The Future of XRP: An Analysis of the SEC’s Potential Appeal
The recent ruling by U.S. Judge Analisa Torres in the ongoing case between Ripple and the United States Securities and Exchange Commission (SEC) has sparked discussions about the future of the XRP token. While some speculate that an appeal by the SEC could have significant implications for XRP, prominent pro-XRP lawyer John E. Deaton has downplayed these concerns.
Understanding the Ripple Ruling and the Howey Test
Judge Torres ruled on July 13 that the programmatic sales of XRP were not in violation of U.S. securities law. This ruling was based on the Howey Test, a framework used to determine whether a contract, transaction, or scheme qualifies as an “investment contract” and therefore a security. The Howey Test consists of four criteria: (1) an investment of money, (2) in a common enterprise, (3) with the expectation of profit, (4) to be gained from the effort of others.
The judge determined that the SEC failed to prove that retail investors expected profits from their investment in XRP based on the entrepreneurial or managerial efforts of Ripple. This ruling provides a critical foundation for understanding the potential ramifications of an appeal by the SEC.
SEC’s Likely Insignificant Appeal
On July 21, the SEC hinted at the possibility of appealing the judgment in its ongoing case against Terraform Labs and its co-founder, Do Kwon. In response to this development, John E. Deaton, a respected lawyer and supporter of XRP, offered a positive outlook on the potential appeal by the SEC.
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According to Deaton, even if the SEC were to pursue an appeal, it would take approximately two years to receive a decision from the second circuit, one of the 13 U.S. Courts of Appeal. This lengthy process highlights the time and effort required for an appeal to reach a resolution.
Furthermore, Deaton highlighted that even if the second circuit were to determine that the application of the third criteria of the Howey Test was incorrect, Judge Torres could still rely on the first two criteria and arrive at the same decision. This suggests that the impact of a potential appeal on the outcome of the case may be limited.
Deaton also pointed out that Judge Torres’s ruling is not final within the Southern District Court of New York, and there is a possibility of another district judge reaching a different conclusion. However, given that Judge Torres cited the ruling in the SEC v. Telegram case, where the commission successfully prevented the distribution of GRAMS tokens, it is unlikely that another judge would have a divergent perspective.
The Market Response and XRP’s Performance
In the midst of these legal proceedings, the market has been closely monitoring the price of XRP. As of the time of writing, XRP is trading at $0.7404, reflecting a 3.58% gain in the last day based on data from Tradingview. This stability in XRP’s price suggests that market participants are not overly concerned about the potential implications of an appeal by the SEC.
In summary, while the SEC has hinted at the possibility of appealing the ruling in the case against Ripple, the potential impact of such an appeal on the future of XRP appears to be limited. The prolonged timeline for a decision, the likelihood of Judge Torres maintaining her position based on the first two criteria of the Howey Test, and the current market response all contribute to a positive outlook for XRP. However, it is essential to closely monitor further developments and the subsequent actions of the SEC to gain a complete understanding of the long-term implications for the blockchain industry and the XRP token.
