Famous legal expert James Murphy, also known as MetaLawMan, has suggested that Ripple should file a cross-appeal in the ongoing SEC case regarding its XRP sales to institutions. This recommendation comes in light of Judge Analisa Torres’ ruling that Ripple’s institutional sales of XRP were considered investment contracts, leading to a hefty penalty of $125 million for violating federal securities law.
In a recent interview with CryptoLaw, Attorney Murphy emphasized that Ripple should challenge the ruling on institutional sales by filing a cross-appeal. He argued that the XRP sales to institutions do not meet the criteria of investment contracts, as these institutions were essentially wholesalers buying XRP at discounted prices from Ripple to resell for profit without any partnership or profit-sharing agreement with the company.
Drawing a parallel to wholesalers purchasing oranges from W.J. Howey in 1946, Murphy explained that the transaction between Ripple and institutional clients should be classified as commodity transactions rather than securities. He highlighted that if these institutions were looking to invest in Ripple, they would have purchased the company’s stock, not XRP.
The attorney suggested that Ripple should challenge the classification of its institutional XRP sales as investment contracts and instead argue that they are commodity transactions. By filing a cross-appeal, Ripple can present its case to overturn Judge Torres’ decision and assert that the sales were purely for the purpose of resale as a commodity.
As Ripple contemplates whether to file a cross-appeal, its chief legal officer, Stuart Alderoty, has indicated that the company is evaluating its options. The deadline for Ripple to officially file a cross-appeal notice is approaching, and if it decides to proceed, the Second Circuit will consolidate this action with the SEC’s appeal into a single case.
The outcome of Ripple’s decision to cross-appeal remains uncertain, but it is clear that Attorney Murphy’s insights have sparked a new perspective on the classification of institutional XRP sales. Ripple’s strategic move in challenging the ruling could potentially reshape the ongoing legal battle with the SEC and redefine the regulatory landscape for cryptocurrency transactions.