Senior U.S. District Judge Rejects SEC’s Approach in Ripple Ruling, Shows Consistency in SEC v. Terraform Labs Case

B. Ali
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Jed S. Rakoff, a senior U.S. district judge, has expressed a contrasting viewpoint from another judge, Analisa Torres, regarding the SEC v. Ripple case involving the cryptocurrency XRP. Judge Rakoff disagreed with the approach used by Judge Torres, which treated XRP differently from other well-known cryptocurrencies like Bitcoin and Ethereum.

Instead, Judge Rakoff believes that all these digital currencies should be treated equally, regardless of how they were sold to investors. According to his view, the regulatory approach to XRP should be similar to that of other cryptocurrencies.

However, this difference in opinion between the judges carries significant implications for the regulation of cryptocurrencies in the future. It indicates an ongoing debate and discussion within the legal system on how best to handle these new forms of assets.

Thus, the outcome may influence how digital assets like XRP are managed and perceived by financial authorities, potentially shaping the future landscape of crypto regulations.

Judge Rakoff’s Ruling Sparks Debate and Concerns Over Ripple Case

Judge Rakoff disagreed with another judge’s approach in a similar case, SEC v. Ripple Labs Inc. He rejected the idea of treating coins differently based on how they were sold (directly to institutions or through secondary markets to retail investors). Instead, he believes all coins should be treated equally, regardless of their manner of sale.

After Judge Rakoff’s action, many people shared their opinions on Twitter. John Reed Stark, a former SEC internet enforcement chief, thinks that the Ripple ruling is in big trouble now. He believes that Judge Rakoff’s decision won’t be the last rejection of the Ripple ruling.

Stark praised Judge Rakoff, saying he is highly respected and experienced in securities law, not only in the Southern District of New York but possibly in the entire U.S. federal court system. This shows that the Ripple case is creating a lot of discussion and debate among legal experts, and Judge Rakoff’s decision is seen as significant.

Legal Community Analyzes Judge Rakoff’s Terra Case Opinion in Light of Ripple Ruling

Many people still support Judge Torres’s ruling on XRP, and some people see similarities between her decision and Judge Rakoff’s in the Terra case. Justin Browder, a partner in Willkie’s Asset Management Department, explained on Twitter that Judge Rakoff’s opinion is not a complete departure from the Ripple ruling.

Judge Rakoff and Judge Torres both agree that tokens themselves are not investment contracts. The disagreement arises from how they are sold. The application of the Howey test, used to determine if something is an investment contract, leads to different outcomes in the Terra and Ripple cases. These differences highlight the complexities in these rulings, and legal experts are carefully examining them.

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Live webinar speaker and derivatives (Forex, Crypto, and Indices) analyst with a broad range of skills for evaluating financial data, investment trends, technical analysis, fundamental analysis, and the best ways to strategies investment selection.  Expertise: Trading Psychology; Speculative Positioning & Market Sentiment; Technical & Fundamental Analysis.