The SEC’s decision to appeal a recent ruling in the Ripple Labs lawsuit is being called a big mistake by crypto legal expert Jeremy Hogan.
What’s the Backstory?
The SEC sued Ripple in 2020, claiming they were selling XRP, a cryptocurrency, as an unregistered security. A judge ruled in October 2023 that only sales of XRP to big investors (institutional sales) were considered securities, leaving retail sales in the clear.
Why is the Appeal a Mistake?
Hogan believes the SEC’s appeal is a risky move with little reward. He argues that:
- The SEC is likely to lose: The judge’s ruling was very detailed and favored Ripple, making it unlikely the SEC will overturn it.
- Even if the SEC wins, it won’t change much: The appeal would likely only result in Ripple paying more money, but XRP’s use wouldn’t be affected.
- Ripple could use the appeal to its advantage: Ripple could argue that the SEC’s overreach could violate “Blue Sky” laws, which protect investors from fraudulent securities sales. This could potentially limit the SEC’s ability to regulate the entire crypto industry.
What’s Next?
Hogan believes the SEC’s appeal is a poor strategic move. He suggests the SEC may be making a poor calculation of risk, potentially jeopardizing its position in the crypto space. The outcome of the appeal could have significant implications for the future of crypto regulation in the US.
