In a significant development in the world of cryptocurrencies, the U.S. Securities and Exchange Commission (SEC) recently announced its intention to appeal a federal judge’s ruling in a landmark cryptocurrency case.
The ruling favored Ripple Labs, stating that almost half of its XRP sales did not violate investor protection laws. This decision gave hope to other defendants facing SEC lawsuits over cryptocurrency sales.
However, the SEC now seeks to challenge the ruling, causing uncertainty for defendants like Do Kwon, the jailed co-founder of crypto firm Terraform Labs.
The SEC’s decision to appeal came after U.S. District Judge Analisa Torres ruled in favor of Ripple Labs, opining that nearly half of its XRP sales did not breach investor protection laws.
This ruling provided hope for other defendants facing similar SEC lawsuits, who argue that the SEC often labels cryptocurrency sales as illicitly sold securities. Judge Torres’ verdict seemed to create a favorable precedent for such defendants.
Among the defendants seeking to leverage Judge Torres’ decision is Do Kwon, the co-founder of Terraform Labs, who faces charges of fraud and other legal violations in a complaint filed by the SEC in February.
Kwon’s lawyers have attempted to use the Ripple case ruling to bolster their defense against the SEC lawsuit.
The SEC issued a statement asserting that Judge Torres should not consider the Ripple case as a precedent in Kwon’s legal battle.
The agency claims that the judge’s decision in the Ripple case introduces “unfounded requirements” to the determination of whether an asset qualifies as a security.
Consequently, the SEC plans to seek “further review,” a move that is widely interpreted as the agency’s intention to appeal the ruling.
The SEC’s decision to appeal the landmark cryptocurrency case ruling has created uncertainty for defendants like Ripple Labs and Do Kwon.
Ripple Labs had celebrated the judge’s verdict as a validation of its position, while Kwon’s legal team had hoped to use the same ruling to strengthen their defense.
However, with the SEC challenging the precedent set by Judge Torres, the landscape of cryptocurrency regulation remains uncertain.
