Ripple Coin Ruling: A Controversial Verdict, Claims Ex-SEC Official

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In a recent turn of events, Ripple Coin has been the subject of a contentious ruling, one that former Securities and Exchange Commission (SEC) official, John Reed Stark, deems as “precarious on multiple fronts.” Stark, a seasoned attorney with years of experience in the SEC’s Enforcement Division, has voiced his concerns over the verdict that favored Ripple Labs.

Stark’s critique was primarily directed at Judge Analisa Torres’ July 13 decision, which favored Ripple Labs in a lawsuit initiated by the SEC in 2020. The lawsuit alleged that Ripple’s XRP token was a security, a claim that Ripple Labs vehemently denied.

The Ripple Coin Verdict: A Closer Look

Judge Torres’ ruling was a mixed bag. She declared that the Ripple Coin was a security when sold to institutional investors, but not in “programmatic sales” or other types of sales, such as token distribution to employees. This ruling has left Ripple Labs facing penalties for the alleged violation and a rescission for institutional investors, whose sales reportedly involved a whopping $720 million.

The judge argued that institutional investors could “reasonably expect that Ripple would use the capital it received from its sales to improve the XRP ecosystem and thereby increase the price of XRP.” However, those who purchased XRP tokens via exchanges “could not reasonably expect the same.”

Stark’s Critique: A Question of Fairness

Stark took issue with the ruling, stating that it creates a “class of quasi-securities that discriminates” based on the sophistication of the investor purchasing the token. He argued that the same token cannot be a security at times and not a security at other times. He further noted that the ruling contradicts investor protection principles, which state that an investor’s level of protection should not be affected by whether they read materials related to the purchase of an asset.

The Ripple Coin Ruling: A Potential Appeal

Stark believes that the Ripple Coin decision “resides on shaky ground” and is ripe for appeal. He predicts that the SEC will appeal the Ripple decision to the 2nd Circuit, which will likely overturn the District Court’s rulings related to ‘programmatic’ and ‘other sales.’

The Ripple Coin Ruling: A Win for Some

Despite Stark’s critique, the Ripple Coin ruling was celebrated as a victory by the crypto community and Ripple Labs. Ripple’s CEO, Brad Garlinghouse, suggested that the SEC might face a lengthy process before having the chance to appeal the decision.

Steve Beckford

Steve Beckford

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