There seems to be a storm brewing for the digital coin XRP. John Reed Stark, a former SEC (Securities and Exchange Commission) employee, recently warned of a potential setback.
According to him, the favorable judgment of the judge is not as firm as it seems. In addition, Stark has indicated that the SEC is considering appealing this ruling, which could mark a potential turnaround.
The complexity of the judgment: same token, different classifications
The recent ruling on the status of XRP illustrates the complexity of the legal system. While one judge has ruled that the crypto token can sometimes be considered a security and other times not, this ruling is not universal. It comes from a single district judge, meaning it doesn’t set a precedent for other courts.
This underlines the importance of the context of each individual case and the perspectives of different judges. The interpretation of the law and its application may vary depending on the specific circumstances of a case and the judgment of the court involved.
For example, the details of the relationship between buyer and seller, the presence of ongoing obligations, and other factors can affect a token’s classification in future instances. These factors could lead to a different judgment depending on the court hearing the case. It is therefore crucial to recognize that another judge may rule differently, making XRP’s future even more uncertain.
An appeal is very likely
Stark underlines that there is a good chance that the SEC decides to appeal the recent ruling in favor of Ripple.
It is expected that a higher federal court, the Second Circuit, will give serious consideration to the appeal against the Ripple decision. They will likely review the appeal with previous judgments in similar cases in mind. For example, the SEC has previously filed cases against other companies, such as Telegram. The difference between these rulings may affect the assessment of the appeal against Ripple.
Contradictions between Ripple and Telegram business
The Ripple and Telegram cases appear to be at odds. According to the Ripple verdict, the status of certain tokens — the so-called quasi-securities — changes depending on who buys them. The ruling suggests that retail investors do not have the same views as institutional investors, which would mean they have different expectations when investing in a token.
Stark disagrees. He finds this approach condescending and even offensive to retail investors. In addition, the ruling states that when tokens are sold through an exchange, and not directly to a sophisticated investor, they lose their status as securities. This reasoning assumes that retail investors may not fully understand what they are buying and who the seller is.
Stark finds this logic strange. He sees it as a violation of investor protection principles and even as discrimination against private investors. He believes this reasoning is contradictory and not in the interest of the average investor.
Conclusion
The recent verdict in favor of Ripple has raised important questions about the classification of crypto tokens. While many legal experts believe the battle between Ripple and the SEC is over, former SEC official John Reed Stark warns that much uncertainty remains.
He said the verdict could potentially be reversed on appeal, especially given the contradictions with previous cases such as Telegram. Stark’s insights highlight that despite the current victory, Ripple and XRP may still face challenges in the near future.
Free 20 euros worth of Crypto
Do you want to enter the crypto world and perhaps buy XRP? Then we have great news for you! Thanks to a special deal between Newsbit and Bitvavo, one of the most accessible and user-friendly crypto exchanges in Europe, our readers are getting an exclusive offer.
If you sign up to Bitvavo via the button below, you will not only receive 20 euros for free, but you will also not pay any trading fees on your first 10,000 euros in transactions.