Although the legal battle between Ripple and the US Securities and Exchange Commission was not heard yesterday, Ripple, XRP, and the entire crypto industry won an important partial victory in the fight against regulation that exceeds the SEC’s enforcement, thanks to lawyer John E. Deaton.
At yesterday’s appeal hearing, the SEC requested a affirmation from the district court judge of New Hampshire issued a broad, vague injunction against the sale of the LBRY token, which token itself is a security, bringing the sale of the secondary market under the SEC’s jurisdiction.
This could not only be dangerous for the sale of XRP in the secondary market but for all cryptocurrencies, except Bitcoin, which has been declared a non-security by the SEC. In new videos for Crypto Law TV, Deaton – who also represented 75,000 XRP holders in the SEC vs. Ripple case – covered what happened in the courtroom.
“We all know that the SEC likes to have maximum law enforcement capabilities. That’s why we’re involved,” he said, reporting that the judge was doing a good job. “He basically looked over to the SEC and said, you agree with him […] Everyone imagines that… Do you agree with Deaton?”
This shows that the judge is willing to implement his decision on November 07, 2022, with the right perspective. At the time, they granted summary judgment to the US Securities and Exchange Commission and classified each sale of LBC tokens over a six-year period as an investment contract without clarifying the nature of the transaction.
This opens the door for the SEC to get closer to its goal of gaining legitimacy through the decision to gain legitimacy of regulatory oversight in the secondary market as well. However, yesterday, the judge explained that the ruling was misinterpreted by the SEC.
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The judge said the SEC should do something and cited two examples. The judge explained one example where LBRY sold LBC tokens to an investment club that was held in cold storage – a direct sale. Judge said he considered it an unregistered security offering and the SEC agreed.
The second example given is the secondary market. Deaton reports:
Then the judge said but if Flipside sells to someone else in the secondary market, independent of LBRY, you must agree that my order does not apply to this scenario. And that’s the victory we got. The SEC must acknowledge the recording, in real time.
Amazingly, the judge then turned to Deaton and said: “amicus, I would point out that my order does not apply to secondary market sales.
This Is An Important Win For Ripple And XRP
The judge is committed to clarifying in the last remedy that he does not rule on the secondary market. The SEC has openly admitted in court that it does not consider secondary sales to be securities. This is a huge partial victory for the entire crypto industry, but also for Ripple, as Deaton further commented:
Today’s hearing if you think we’re going to get regulation by congress, then the ruling is irrelevant because congress will provide clarity. If we’re not going to get clarity from congress, we’re not going to have some regulation that says something that defines security, […] then this hearing is very important.
LBRY Hearing: The Stakes for ALL Crypto https://t.co/YPbrBkw0Od
– CryptoLaw (@CryptoLawUS) January 30, 2023
At press time, the price of XRP was at $0.3955, down 3.8% in the last 24 hours. With this, XRP is following the general sentiment on what will be the risk measure ahead of tomorrow’s FOMC meeting.
Option image from Gr Stocks / Unsplash, Chart from TradingView.com