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The Ripple judgment is worrying in several ways
The judgment in the Ripple case is expected to be overturned, claims John Reed Stark, former head of the Internet enforcement at SEC (Securities and Exchange Commission). In his opinion, the court ruling is "worrying in several ways" and is contrary to the order of the SEC to protect investors. The court decided that Ripple (XRP) was sold to institutional investors as security. Therefore, the judgment grants these investors the protection of the SEC. However, the judgment does not protect small investors because it determines that XRP is not a security if it is traded on crypto exchanges. According to Stark, this decision creates a "class of quasi-securities", which depending on the experience ...
The Ripple judgment is worrying in several ways
The judgment in the Ripple case is expected to be overturned, claims John Reed Stark, former head of the Internet enforcement at the Securities and Exchange Commission). In his opinion, the court ruling is "worrying in several ways" and is contrary to the order of the SEC to protect investors.
The court decided that Ripple (XRP) was sold to institutional investors as securities. Therefore, the judgment grants these investors the protection of the SEC. However, the judgment does not protect small investors because it determines that XRP is not a security if it is traded on crypto exchanges.
Laut Stark creates this decision a “class of quasi-securities” that discriminates and changes depending on the experience of investors. This contradicts the case law of the SEC and is unprecedented in this context.
The court argued that tokens that are traded on stock exchanges are not securities because it is assumed that customers know nothing about the crypto issuer. This considers this to be a non -sustainable defense for a securities violation.
strongly described the judgment as condescending and insulting, since it assumes that small investors are generally ignorant. It is of the opinion that small investors bought XRP because they believed that the course would increase due to Ripple, even if they did not know that they were putting on capital to the company.
The decision asks whether investors can expect profits from the efforts of a known or unknown third party. Strongly asks how it is possible that tokens that are considered securities when they are sold to institutional investors are suddenly “no securities” if these institutional investors or the issuer themselves sell the tokens on coinbase or bony.
The court ruling in the Ripple case is a partial judgment in the quick procedure of a single district judge. It is important and worth studying, but not a binding precedent for other dishes. Stark assumes that the judgment will be appealed and the second judicial district will decide on the appeal.
However, it should be noted that Kayvan Sadeghi, a crypto lawyer and member of Wall Street Blockchain Alliance, criticizes Stark's argument. He explains that the Court ruling XRP does not refer to as a security and therefore the name of XRP never changes. The token itself does not embodate the circumstances of the transactions and will never be a security itself.Overall, it remains to be seen how the Ripple judgment will continue to be treated and whether it is really tilted. However, there is disagreement as to whether XRP is considered a security or not.