A crypto legal expert says the U.S. Securities and Exchange Commission’s (SEC) decision to appeal a ruling in the Ripple Labs lawsuit is a huge mistake.
The SEC first sued Ripple Labs in December 2020, alleging that the firm was selling the crypto asset XRP as an unregistered security.
In October 2023, a judge ruled that only the sales of XRP at the institutional level qualify as sales of securities, leaving retail sales in the clear. But last week, the SEC announced that it was going to appeal the decision, which prompted Ripple chief legal counsel Stuart Alderoty to proclaim that the SEC is just prolonging its years-long war on the crypto asset industry.
In a new thread on the social media platform X, attorney Jeremy Hogan says the SEC’s move to appeal the decision is a big blunder from a risk-reward standpoint.
“Big mistake by the SEC. It will appeal the programmatic sales ruling and IF it wins, it will get more money from Ripple and have protected no one.
Ripple will raise its ‘Blue Sky’ law issue and, if it wins, the SEC’s ability to regulate the entire crypto space is essentially destroyed. Not a good calculation of risk by the SEC (it would make a poor stock trader).”
Blue Sky laws are intended to protect the general public against fraudulent sales of securities by having firms register their offerings unless exemptions are available.
Hogan goes on to say that the odds are not in favor of the SEC.
“The SEC is very very likely to lose, both statistically and based on the fact-heavy way the judge wrote her opinion. Even IF the SEC were to ‘win’ on appeal, it’s very very likely just a matter of money – nothing would change as to XRP and its use by Ripple.”
Generated Image: Midjourney