Former Securities and Exchange Commission (SEC) employee John Reed Stark has made a statement that might have a significant impact on the future of the cryptocurrency XRP by warning that the current ruling in XRP’s favour is on “shaky ground.” He said that the SEC is prepared to appeal, which can result in a decision being overturned.
The relevant judgement indicates that a given token may occasionally be treated as a security and occasionally not. It is not enforceable in other courts since it is a partial summary judgement rendered by a single district court judge. Furthermore, it is critical to understand that every bitcoin situation is unique and depends on a variety of factors, including the strength of the relationship between the buyer and seller, the existence of continuous commitments, and more.
Stark went on to say that it is not only likely but also eagerly expected that the Ripple ruling would be appealed. The court is anticipated to certify an urgent, interlocutory appeal due to the extraordinary nature of the decision. The Second Circuit will probably evaluate the appeal in light of the divergent rulings in related SEC proceedings involving other firms, such Telegram.
The examples of Telegram and Ripple appear to be at odds with one another. The Ripple ruling creates a class of quasi-securities that vary according to the level of expertise of the purchaser purchasing the securities. In summary, the judgement contends that because ordinary investors do not have the same knowledge as institutional investors, they have different expectations when they invest in a token. This, according to Stark, is not just patronising but also offensive.
The ruling also indicates that tokens stop becoming securities when they are sold to an exchange rather than an experienced investor directly. This is predicated on the idea that regular investors could not completely comprehend what they are buying and may not be aware of who the vendor is. Stark believes that this logic is discriminatory towards small investors, illogical, and at odds with investor protection standards.
