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The tussle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) is far from over, with the SEC contemplating an appeal to a recent verdict that XRP is not a security in transactions with retail investors.
Ripple Labs has been in the crosshairs of the SEC for some time now, but the tide seemed to turn with the recent court ruling. According to the SEC, this ruling contravenes core tenets of securities law, including the Howey test, a crucial determinant of what constitutes an investment contract.
The SEC's apprehensions about the ruling were divulged during its ongoing case against Terraform Labs and its founder, Do Kwon, in which the SEC accuses them of engineering a multi-billion dollar crypto asset securities fraud. In its response to Terraform Labs' dismissal motion dated July 21, the SEC expressed dissatisfaction with the court's recent verdict on XRP.
The SEC indicated that despite the defendants' claims, many aspects of the Ripple verdict uphold the SEC's position in the case. However, it was quick to point out that it does not align with certain aspects of the decision, specifically regarding the sales of XRP. In their view, the Ripple ruling conflicts with the Howey test and adds unwarranted criteria to it.
Moreover, the SEC is strongly considering the prospects of further review and is likely to recommend seeking such review, a sign of disagreement with the court's stance. These remarks emerged a few days after Gary Gensler, the SEC's Chair, voiced his disapproval of the court's decision.
During an interview with Yahoo Finance on July 17, Gensler expressed satisfaction that the court recognized a token for institutional investors as a security. However, he lamented the part about retail investors and mentioned the SEC is still evaluating it.
Gensler also spoke at the National Press Club on the same day, discussing artificial intelligence. When asked about the court rulings, he noted the importance of establishing clear industry regulations.
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