- Former SEC official John Reed Stark outlined his views on the outcome of the SEC vs. Ripple lawsuit.
- Stark explained the decision from the judge establishes a class of quasi-securities based on the sophistication of the investor.
- He added that the result of the lawsuit outcome is troublesome on multiple fronts and could soon be overturned by the Commission.
Cryptocurrency markets were taken by storm when the longstanding lawsuit between the United States Securities and Exchange Commission (SEC) and Ripple saw a partial conclusion. But a large portion of the investors seem to be forgetting the other half of the SEC vs. Ripple case, which could prove costly for Ripple.
More SEC vs. Ripple coverage
XRP update: Ripple win in landmark SEC case likely puts XRP and crypto market in jeopardy for these reasons
Can XRP price hit $1? Watch these levels next
Breaking: Ripple records landmark win against the SEC as court rules XRP is not a security except...
Former SEC official breaks down the SEC vs. Ripple decision
John Reed Stark, a former SEC official, penned a post on LinkedIn detailing his thoughts on the SEC vs. Ripple lawsuit development. Straight off the bat, Start notes that Ripple’s win, albeit partial, “resides on shaky grounds.” But he acknowledges that this is a blow for not just the SEC but also its chairman, Gary Gensler.
The ruling on the SEC vs. Ripple lawsuit is split into three categories.
- Institutional sales: This category of sales to sophisticated investors and individuals via a written contract is deemed as security.
- Programmatic sales: The second category involves the sale of XRP exchanges, and the court rules that XRP is not a security.
- Other sales: These involve the sale of XRP to insiders, retail investors via exchanges, and founders. In such a case, the XRP token is not a security.
The former SEC official notes that due to this categorization, the “Ripple decision is troublesome on multiple fronts.” He goes on to explain that the decision “establish a class of quasi-securities that discriminates and morphs based on the sophistication of the investor who is buying the securities.” This, according to Stark, is “counter-intuitive, inconsistent with SEC case law and unprecedented in this context.”
On the topic of XRP morphing into security and not security depending on the sophistication of the investors, John Reed Stark notes that this argument “seems contrary to sacrosanct and basic investor protection principles.”
Lastly, Stark adds that the fact that the decision means that only the wealthy investors receive protection from the SEC while the less sophisticated and retail investors do not.
In other words, rich people get support and avenues for redress yet poor people get Caveat Emptor. This seems unjust and contradicts the very foundation of U.S. securities laws."
While there is a real possibility that the decision that favors Ripple and XRP supporters could be overturned, it will take some time for it to go through proper channels and reach a conclusion. In the meantime, this decision could be a precursor that triggers a massive bull run.
More on top cryptocurrencies to rally next
Top 3 cryptocurrencies to focus on in July 2023 and their targets: SOL, OP, COMP
Why Ethereum’s EIP-4844 could kickstart bull run for Optimism (OP), Arbitrum (ARB), Polygon (MATIC)
Bitcoin, Ethereum and Ripple price crashes, liquidations hit nearly $500 million as XRP hype dissipates
Like this article? Help us with some feedback by answering this survey:
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
VanEck sees Bitcoin reaching $61 trillion market cap, Marathon buys $100 million BTC
Bitcoin declined by 1% on Thursday following asset manager VanEck's forecast that the top digital asset will reach a $61 trillion market capitalization by 2050.
Ethereum Classic price sets for a rally following retest of key support
ETC edges higher by 2.3% and trades around $22.60 at the time of writing on Friday after testing a key support area the day before. On-chain data showing increased account growth suggests a bullish move ahead. Ethereum Classic price faced rejection by the daily resistance level of $25.13 earlier this week.
Celebrity meme coins lose their shine
Celebrity meme coins report by Jupiter Slorg on Thursday shows that these tokens have been in deep waters since early July after experiencing heavy growth in June. In a recent analysis, Jupiter Slorg revealed that celebrity meme coins are down by an average of 94% from their all-time highs.
Ripple gains 5%, Mark Cuban says Kamala Harris’ nomination could affect SEC lawsuit
Ripple (XRP) made a comeback above key psychological resistance early on Wednesday. Crypto traders are optimistic after the Ethereum Exchange Traded Fund (ETF) launch. Entrepreneur and investor Mark Cuban recently shared his comments on how Kamala Harris’ nomination to the Presidential elections could influence crypto regulation.
Bitcoin: Will BTC manage to recover from recent market turmoil?
Bitcoin recovers to $67,000 on Friday after finding support around $63,500 a day before. Still, BTC losses over 1.50% on the week as Mt. Gox persists in transferring Bitcoin to exchanges.