Stuart Alderoty, a legal representative for Ripple, implied that non-institutional crypto sales may be immune to certain Securities and Exchange Commission (SEC) claims.
This followed a recent court ruling, which Alderoty highlighted in footnote 20, suggesting the SEC's stance could be significantly subjected to a fair notice defense. This came on the back of a ruling categorically defining Ripple's XRP token as not a security, as per law.
Crypto advocate John Deaton also weighed in on the ruling's ramifications. Contrary to many legal interpretations, Deaton clarified that the court didn't reject the fair notice defense outright. It merely dismissed its applicability to institutional sales. Consequently, defendants might be able to argue fair notice for other types of sales such as secondary sales on exchanges, potentially altering future SEC enforcement actions' trajectory.
Deaton's interpretation was supported by Alderoty, who hailed the decision as a monumental victory for Ripple and the larger cryptocurrency industry. Alderoty acknowledged the court's determination that, by law, XRP isn't a security, along with sales on exchanges and executive sales. The only aspect identified as an investment contract by the court was Ripple's past direct XRP sales to institutional clients.The SEC's lawsuit against Ripple has significantly influenced the global crypto industry, instilling uncertainty about the regulatory status of numerous digital assets. The recent court ruling, along with a possible tilt towards a more balanced discussion on crypto regulation, could significantly influence future cryptocurrency-related legal battles. Alderoty's sentiments mirror a widespread industry demand for transparent, fair, and predictable regulatory frameworks.
The ruling indicated that Ripple illegally sold $728 million of unregistered securities via institutional sales of XRP but did not illegally offer $757 million through programmatic sales or $609 million through other distributions of XRP. However, the judge did not make a clear ruling on whether XRP itself is a security, nor did she address the legality of 99% of XRP trading volume since 2017. Despite this, the price of XRP rallied over 60% following the news.