The US Securities and Exchange Commission (SEC) may have wounded itself in the foot, according to legal experts, who believe that Ripple, a blockchain startup established in the United States will likely prevail in its protracted legal battle.
According to a Forbes story, several legal experts opined that the agency entirely failed to establish its case. Thousands of retail XRP holders may have been a crucial factor in Ripple’s demise. Although they were unable to be named as defendants with Ripple, the court permitted them to write amicus briefs so that their perspectives may also be heard.
Attorney Jeremy Hogan reportedly said, “The SEC’s summary judgement request can only succeed if Judge Torres “forgets her freshman year of law school.”
In addition, prominent legal authorities, such as Curt Levey of the Federalist Society and Professor J.W. Verret of George Mason University’s Scalia School of Law, claim that “Ripple is likely to prevail in this lawsuit.” Verret said that if the SEC were to go to the Supreme Court, he would not be surprised.
The Howey Test refers to the US Supreme Court ruling that determines whether a transaction qualifies as an “investment contract” and, therefore, a security.
Consequently to Forbes, “The ruling may severely restrict the SEC’s ability to regulate cryptocurrencies in the United States. If this is how it ends, it was a self-inflicted tragedy from the beginning.”
In December 2020, the SEC filed this action against Ripple and its top officials, arguing that XRP is an unregistered security. It was asserted that XRP has been a security since 2013 and that sales of billions of XRP on the secondary market in the seven years before the case were also securities.
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