SEC vs. Ripple update: Former SEC official explains why Ripple’s win could be overturned

  • 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.

  1. Institutional sales: This category of sales to sophisticated investors and individuals via a written contract is deemed as security.
  2. Programmatic sales: The second category involves the sale of XRP exchanges, and the court rules that XRP is not a security. 
  3. 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.

Join Telegram

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended content

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content

Editors’ Picks

Bitcoin tags $60,000 for the first time in more than two years

Bitcoin tags $60,000 for the first time in more than two years

Bitcoin hit $60,000 after more than two years below this level. BTC liquidations have surpassed $277 million in the last 24 hours. This massive rally in the pioneer cryptocurrency could be attributed to the spot ETF approval.

More Bitcoin News

Arbitrum price resumes rally with Web3 gameathon plan for March

Arbitrum price resumes rally with Web3 gameathon plan for March

Arbitrum, an Ethereum Layer 2 scaling solution, has announced an event for Web3 gaming. The event is likely to attract community members, delegates and Web3 gamers. This could positively influence Arbitrum adoption and is likely to boost ARB gains. 

More Arbitrum News

Ethereum price hits new yearly high at $3,369 as staked Ether rises to 26%

Ethereum price hits new yearly high at $3,369 as staked Ether rises to 26%

Ethereum price has climbed to a new 2024 high of $3,369 on Wednesday. Bitcoin’s rally to $59,000 and the upcoming Dencun upgrade activation on mainnet have likely catalyzed Ethereum’s price gains. 

More Ethereum News

XRP climbs to $0.58 as SEC pushes for deadline extension in Ripple lawsuit

XRP climbs to $0.58 as SEC pushes for deadline extension in Ripple lawsuit

XRP price rallied on Wednesday in response to the Securities and Exchange Commission’s (SEC) push to delay the remedies briefing deadline in its lawsuit against the payment remittance firm. 

More Ripple News

Bitcoin: BTC likely to correct to $50,000 soon

Bitcoin: BTC likely to correct to $50,000 soon

Bitcoin price has formed a potential top signal that forecasts a sell-off. The weekly chart also points to a bearish divergence, which adds credence to the bearish outlook. Investors can expect BTC to consolidate between the $52,062 to $45,160 levels.

Read full analysis