Federal Judge Rejects Ripple Ruling, Paving Way for SEC’s Case Against Terra in Crypto Regulation Saga

Federal Judge Rejects Ripple Ruling, Paving Way for SEC’s Case Against Terra in Crypto Regulation Saga

In a surprising turn of events, a federal judge in New York has taken a different stance on cryptocurrency regulation, rejecting the earlier ruling that Ripple Labs’ token was not a security when sold on secondary markets. The decision by US District Judge Jed Rakoff has sent shockwaves through the crypto community and has muddied the regulatory outlook for digital assets.

The ruling came as a blow to Terraform Labs Pte and its founder Do Kwon as the Securities and Exchange Commission (SEC) was given the green light to proceed with its case against them. Judge Rakoff specifically rejected the distinction made in the Ripple case between public and secondary market buyers, citing the Howey test, which determines whether crypto assets should be classified as securities.

 

 

Industry experts, including former SEC Chair John Reed Stark, have noted that this decision could spell significant implications for the ongoing Ripple case, potentially allowing the SEC to leverage this precedent and appeal against the landmark XRP ruling. The future of cryptocurrency regulation remains uncertain as the legal battle continues.