SEC to Appeal XRP Decision
A recent filing in an action the SEC brought against Do Kwon following the infamous Terra Luna collapse offers a glimpse into the agency's litigation strategy for XRP.
And the appeal looks like it could be strong.
The SEC told the Do Kwon court it “should not follow” Judge Torres’ decision in SEC v. Ripple. This is perfectly plausible because district court decisions, while important, are NOT binding on other courts.
The best argument I saw in the filing was that Judge Torres inappropriately **added** requirements to the Howey test including requiring a “direct sale” of the token, a sale that included individual promises to buyers, and that those buyers knew their money was going directly to fund Ripple.
These are NOT part of the Howey test, but for some reason Judge Torres incorporated them anyway. And this is where the SEC stands the best chance to prevail on appeal.
Not only is the “direct sale” distinction one that historically never mattered, but it also turns the Securities Act and the purpose of the SEC on its head. Recall, these statutes were passed in the 1930s in response to retail (and the whole world) getting rugged by supposedly sophisticated institutional investors.
But what does Judge Torres do? She gives the protection (to the extent you view the SEC that way) not to retail but to institutional investors! That makes very little sense and the SEC has now signaled it will take this development up on appeal in the 2nd Circuit.
Will keep updating legal developments here in Bitcoin and occasionally the broader crypto space as they happen.
Share this and/or send a Zap if you found this post interesting!
BryanJ / Bryan Jacoutot
npub1yq…5ys35
2023-07-24 16:12:15
Author Public Key
npub1yq30qlvj0zgxgt6884avm07qdxuuk5d5xvce4md3rvlrf8rp62xqy5ys35Published at
2023-07-24 16:12:15Event JSON
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"content": "SEC to Appeal XRP Decision \n\nA recent filing in an action the SEC brought against Do Kwon following the infamous Terra Luna collapse offers a glimpse into the agency's litigation strategy for XRP.\n\nAnd the appeal looks like it could be strong.\n\nThe SEC told the Do Kwon court it “should not follow” Judge Torres’ decision in SEC v. Ripple. This is perfectly plausible because district court decisions, while important, are NOT binding on other courts.\n\nThe best argument I saw in the filing was that Judge Torres inappropriately **added** requirements to the Howey test including requiring a “direct sale” of the token, a sale that included individual promises to buyers, and that those buyers knew their money was going directly to fund Ripple.\n\nThese are NOT part of the Howey test, but for some reason Judge Torres incorporated them anyway. And this is where the SEC stands the best chance to prevail on appeal.\n\nNot only is the “direct sale” distinction one that historically never mattered, but it also turns the Securities Act and the purpose of the SEC on its head. Recall, these statutes were passed in the 1930s in response to retail (and the whole world) getting rugged by supposedly sophisticated institutional investors. \n\nBut what does Judge Torres do? She gives the protection (to the extent you view the SEC that way) not to retail but to institutional investors! That makes very little sense and the SEC has now signaled it will take this development up on appeal in the 2nd Circuit.\n\nWill keep updating legal developments here in Bitcoin and occasionally the broader crypto space as they happen. \n\nShare this and/or send a Zap if you found this post interesting!",
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