As is now known, the SEC has officially appealed its case against Ripple following a historical ruling on Aug. 7, in which Ripple was ordered to pay a $125 million civil penalty, which was a lot less than the $2 billion the regulator was asking for. The motive is that the district court’s decision goes against long-standing Supreme Court precedents and established securities laws.
Ripple’s Chief Legal Officer Stuart Alderoty said he was disappointed with the SEC’s decision. He called the lawsuit “irrational” and “misguided” from the start and mentioned that the court had already rejected the SEC’s claim that Ripple acted recklessly and that there were no allegations of fraud, victims or losses.
Alderoty’s comments drew a reaction from Charles Hoskinson, the founder of Cardano, who ironically suggested that the ongoing Ripple case could potentially replace the Howey Test, the legal precedent used to determine whether certain transactions qualify as investment contracts under U.S. securities law.
Stu, you ready to replace Howey with the Ripple Test 🙂
— Charles Hoskinson (@IOHK_Charles) October 3, 2024
Of course it is a sort of joke from Hoskinson. But considering that Howey was set in 1946, when the founders of XRP and Ripple were not even involved in the project, and that the Ripple case has become a focal point for many in the cryptocurrency market, it may not be so far from reality.
Many people in the industry think this case is a key moment for getting some clarity on the rules around digital assets, and the outcome could set new standards in securities law regarding crypto.
