Attorney Bill Morgan has clarified that the SEC’s latest appeal in the Ripple Labs case does not apply to secondary market sales of XRP made by retail investors. The appeal focuses on Ripple’s programmatic sales and distributions of XRP, not individual transactions on exchanges.
The clarification comes after the U.S. SEC filed an appeal notice on October 2nd, following Judge Analisa Torres’s ruling in July.
Confusion Concerning SEC Appeal Scope
In a post on X, Morgan explained that Judge Analisa Torres did not rule on secondary sales of XRP, which involve transactions made by individuals on exchanges, such as retail investors trading XRP. The ruling only applied to Ripple’s programmatic sales of XRP, where Ripple used automated processes to sell the cryptocurrency on the open market.
Morgan emphasized that secondary sales were not part of the original ruling and cannot be included in the appeal. The SEC’s focus is on Ripple’s direct sales and potential penalties related to those sales.
There is some confusion in this matter about the issue of secondary sales. Some people treat Ripple’s sales by the programmatic means to retail investors via exchanges as secondary sales. Judge Torres did not rule on secondary sales in the sense of sales made by you and I if we… https://t.co/sAmLVbuj61
— bill morgan (@Belisarius2020) October 3, 2024
This clarification is important because some commentators believe secondary sales of XRP and Ripple’s programmatic sales are the same thing.
XRP Status Unchanged
Attorney Jeremy Hogan also weighed in on the SEC’s decision to appeal, calling it a risky move for the regulator. Hogan believes the SEC’s chances of winning the appeal are low due to the fact-heavy nature of Judge Torres’s ruling.
Even if the SEC were to succeed, Hogan believes it would result in additional financial penalties for Ripple without changing XRP’s legal status or its use by Ripple.
Hogan further noted that the SEC’s appeal will not challenge the ruling that XRP itself is not a security. The SEC “will NOT (and cannot) appeal that XRP is not a security,” he stated.
According to Hogan, the appeal process could extend until late 2025 or early 2026, delaying a final resolution.
XRP ETF Future Remains in the Air
This appeal comes at a time when asset manager Bitwise has filed for an XRP ETF with the SEC, aiming to offer institutional access to XRP. However, XRP enthusiasts remain uncertain about the approval, especially in light of the SEC’s ongoing legal battle with Ripple.
An X user expressed skepticism, stating that the ongoing SEC appeal could delay the approval of an XRP ETF by 6 to 18 months, similar to the delays seen with Bitcoin spot ETFs. However, another user, Moon Lambo, disagreed, arguing that the appeal does not involve XRP’s secondary market sales and would not impact the approval of an XRP ETF.
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