According to Dennis Kelleher, CEO of Better Markets, the potential winner of an appeal in the legal dispute between Ripple and the US Securities and Exchange Commission (SEC) has been revealed. While both parties have not yet appealed the case, there is a possibility for it to happen.
Likelihood of SEC Winning an Appeal
Kelleher stated in a post on X (formerly Twitter) that the SEC has a 90% chance of winning on appeal in their ongoing legal battle with Ripple. The Better Markets CEO criticized Judge Analisa Torres for ruling that institutional investors were protected by securities laws instead of retail investors, claiming that other judges have not followed this ruling.
Referring to Judge Torres’ previous ruling, where she considered Ripple’s institutional XRP sales as investment contracts but not the programmatic sales, potential areas for appeal are highlighted. This ruling contradicted the SEC’s argument that XRP is a security, making it a possible ground for appeal in the future.
On the other hand, Ripple’s Chief Legal Officer, Stuart Alderoty, believes his company will prevail in case of an SEC appeal. Alderoty suggested that the SEC only has a 10% chance of winning the appeal and confirmed Ripple’s intention to pay the $125 million fine imposed by Judge Torres for violating securities laws.
Alderoty previously expressed his discouragement towards the SEC appealing, emphasizing that they shouldn’t do so as a “rational actor.” Ripple seems unlikely to appeal any court rulings, emphasizing their willingness to pay the fine and move forward.
Addressing Misconceptions
While Kelleher claimed that other judges have refuted Judge Torres’ ruling, it is essential to note that Judge Amy Berman Jackson adopted a similar approach in the Binance US vs. SEC case. Judge Jackson dismissed the SEC’s argument regarding Binance Coin (BNB) secondary sales as investment contracts and rejected the notion that all cryptos are securities.
Both judges invoked the Howey Test to explain that crypto tokens should not be classified as securities, unless they functioned as investment contracts in their sale. This framework led Judge Torres to classify Ripple’s XRP sales to institutional clients as investment contracts due to the potential profit expectation, contrasting with retail investors’ lack of such expectations.
Cover image from Dall-E, chart from Tradingview
