03.04.2024

Already two federal judges have rejected the Ripple ruling, what does this mean?

Fox Business senior correspondent Charles Gasparino has speculated that the favorable ruling Ripple received from Judge Analisa Torres against the U.S. Securities and Exchange Commission (SEC) may not hold up in a higher court.

This speculation comes in the wake of the controversy in the Coinbase v. SEC ruling, in which the SEC won a decisive victory challenging the idea that digital assets can circumvent securities laws – a decision that could have far-reaching implications for the crypto industry as a whole.

Will the Ripple decision be reversed?

Gasparino drew attention to the growing skepticism among federal judges regarding Judge Torres’ ruling in favor of Ripple. Specifically, he noted that so far two judges, including one who is considered the “dean” of the corporate law court system (Rakoff), have disregarded arguments using Judge Torres’ Ripple decision as precedent.

He added that “no one can guarantee that the decision will be overturned and XRP will be declared an unregistered security, but there are indications that its legal analysis is flawed.”

This skepticism was echoed in the legal community following Judge Katherine Polk Failla’s ruling in Coinbase v. SEC. He stated that “securities lawyers” believe that the judge’s ruling against Coinbase “should serve as a warning to XRP holders that Judge Torres’ analysis of Ripple is likely to be overturned by the federal courts.”

Failla’s ruling emphasized that “the nomenclature of cryptocurrencies may be recent, but the challenged transactions fit comfortably within the framework that courts have used to identify securities for nearly eighty years,” effectively rejecting the application of the Torres decision on Ripple as a defense.

Gasparino emphasized that the judge in the Coinbase case rejected Coinbase’s contention that Judge Torres’ decision supports its case for dismissal. Instead, Judge Failla cited Rakoff’s analysis of Terraform, which also rejected Torres’ analysis.

This view takes on even more weight given SEC Chairman Gary Gensler’s hardline stance on cryptocurrencies, including Ethereum (ETH), suggesting strong regulatory action that could challenge Torres’ decision. “If Gary Gensler considers ETH a security, the SEC will stop at nothing to get Torres’ bizarre underhanded decision on Ripple overturned on appeal, and they stand a good chance of doing so,” Gasparino noted.

XRP Community Responses

The discussion was not without rebuttal from the XRP community. Jesse Hines, a lawyer and staunch XRP supporter, criticized Gasparino’s logic based on the Coinbase decision, stating, “This is a really bad approach, lol. No real lawyer would take what was essentially a motion to dismiss and apply it to the SJ decision. The haters need to come up with better content.” This underscores the view in the pro-XRP camp that the legal nuances of the case are being oversimplified or misunderstood.

Bill Morgan, another pro-XRP lawyer, directly challenged Gasparino’s interpretation, asking for explicit citations that would support claims of judicial skepticism of Judge Torres’ decision, “To help your readers, please point to citations in any decision by these two judges. in which they ‘mock’ arguments based on the SEC v. Ripple decision. You’re certainly not talking about two motions to dismiss, given the nature of such motions versus summary judgment.”

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Коля Мельниченко

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