In a legal case rocking the cryptocurrency industry, Judge Jed Rakoffa overturned previous judgment in favor of Ripplewhile he refused the motion to dismiss the case brought by the SEC against Terraform Labs. The argument made by Terraform Labs concerned the absence of a contract in the sale of UST to retail investors.
Judge Rakoff Contradicts Judge Torres’ Ruling on Ripple’s XRP
In a reversal of the situation, Judge Rakoff made a decision that directly contradicts that of Judge Analisa Torres in the XRP case. Remember that the latter had stated that XRP could not be considered a security in certain cases, but it was when sold to institutional investors.
This definition had given rise a controversy with the SECwhile the crypto community had celebrated the decision as a resounding victory.
However, for Judge Rakoff, there is no need to differentiate the mode of sale or the buyers. According to him, this would have little influence in determining whether a token is considered a security or not.
Implications for Ripple’s XRP following the jurisdictional dispute
Rakoff’s decision does not invalidate that rendered by Justice Torres. Thus, the decision regarding Ripple’s XRP currently remains in effect. However, Rakoff’s decision could pave the way for broader cryptocurrency regulation in the future. If the court hearing Gary Gensler’s appeal finds the definition persuasive, this might strengthen the argument of the SEC.
Terraform Labs vs SEC case: the repercussions of Judge Rakoff’s decision
Judge Rakoff’s decision has significant repercussions on the case opposing Terraform Labs at the SECleaving the one with Ripple in a less impacted position. Terraform Labs’ defense had claimed that the recent XRP ruling rendered their case obsolete, but the judge did not accept this argumentleaving the case still in legal litigation.
In his statement, Justice Rakoff specifically wrote:
“The Court rejects the approach recently taken by another judge in this district in a similar case.”
To date, the judge in charge of the case rejected the various arguments presented by Terraform Labs to quash SEC lawsuits against him.
Despite this, Terraform Labs lawyers have won a small victory, as FTX wallets related to the Terra Luna crash incident will be available for analysis. It could be good for society in his defense against the charges of the SEC. As a reminder, the American regulatory authority accuses Terraform Labs of having conspired on the UST.
After the publication of the judgment, the price of XRP suffered a drop of around 2%, down to $0.68 after hitting an intraday high of $0.72. At the time of writing, XRP was trading around $0.69.
As the case continues, the eyes of the cryptocurrency industry remain on future developments, as this court ruling could impact other cryptocurrency-related cases in the future.
Source : Coindesk