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Ripple and XRP Triumph May Be Cut Short on Appeal, Thinks SEC Veteran

Sun, 07/16/2023 - 10:57
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Gamza Khanzadaev
Law expert Marc Fagel sees chances for financial watchdog to beat Ripple and XRP on appeal
Ripple and XRP Triumph May Be Cut Short on Appeal, Thinks SEC Veteran
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In a recent court verdict, Ripple, the blockchain payments firm, achieved a significant victory as the court ruled that its sales of XRP to retail investors did not constitute an offering of investment contracts. However, the court determined that institutional sales of XRP did constitute an unregistered offer and sale of investment contracts.

Ripple's Chief Lawyer Roasts SEC After Epic Victory

Now, a former SEC regional director and experienced attorney, Marc Fagel, believes that this triumph for Ripple and XRP may be short-lived if the case is appealed to the Second Circuit Court.

Fagel contends that the court's decision has created a divided outcome, causing damage on both sides of the dispute. While crypto enthusiasts may celebrate the clearance of secondary sales, Fagel finds this part of the ruling inconsistent with the intent of securities laws.

Welcome to lap two

Addressing the argument that the court dismissed the existence of a contract because buyers on exchanges do not know the sellers, Fagel acknowledges the contract law perspective but disagrees from a securities standpoint. Drawing a parallel to stock purchases, ex-attorney highlights the illogical disparity in outcomes between investment contracts and other forms of assets, predicting that the Second Circuit Court might reverse the decision.

Ripple CEO Calls SEC 'Bully' as XRP Lawsuit Sets Landmark Precedent

SEC veteran expresses curiosity about the Second Circuit's perspective on the matter, but expects a long wait for the outcome. He believes that the court's conclusion that no reasonable investor expects profits from a third party when purchasing an asset indirectly is a reversible error. Fagel's experience as an SEC director lends weight to his opinion that Ripple's triumph in the lower court could be curtailed in the appellate process.

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About the author

Financial analyst, trader and crypto enthusiast.

Gamza graduated with a degree in finance and credit with a specialization in securities and financial derivatives. He then also completed a master's program in banking and asset management.

He wants to have a hand in covering economic and fintech topics, as well as educate more people about cryptocurrencies and blockchain.