The recent ruling in the TerraForm Labs’ case, where a federal judge rejected Judge Torres’ distinction regarding XRP sales, has started a controversy within the cryptocurrency community. Judge Torres classified Ripple’s sales to institutional investors as securities, but thought that those sold through digital exchanges as crypto. Interestingly, Do Kwon of TerraForm Labs and its founder, stated Judge Torres’ decision established a legal precedent to decline the Securities and Exchange Commission (SEC)’s lawsuit. The SEC disagreed and disagreed sued a countermotions, declaring that Judge Torres had erred in her ruling.
Furthering developments in the Terra case, Judge Jed Rakoff, ruling on matter, motive a giant discussion on Twitter. Former securities lawyer, John Reed Stark, took to the social media platform to offer his conviction that Ripple’s decisions are bunched together with “big trouble”.
On the contrary, Ripple’s CTO held a distinct point of view. He emphasized that the verdict is based on a unconventional interpretation of the circumstance and fails to correctly exemplify how cryptocurrencies function. Schwartz circulated an passage in the ruling, assuring that nothing stated by the judge refers to customary crypto assets too.
He also enlightened that Judge Rakoff’s refusal to embrace Judge Torres’ ruling was caused by divergences in facts rather than a main disagreement. Schwartz asserted that Judge Rakoff’s decision could be translated in two potential ways for XRP fanciers: the worst and best precedent.
In the first scenario, Schwartz put that the judge’s could indicate a reluctance to track Judge Torres’ ruling as he verified more tests that were absent from the Howey test. On the the other hand, the Ripple CTO hypothesised that Judge Rakoff disputed with the proposition of following Judge Torres’ judgement because her good reason incriminated facts that were unintelligible to the TerraForm Laboratories case.
To wrap up, Schwartz presumed that the Howey test does not tell apart between secondary market sales and those sold to institutional investors mainly.
The apprehension provided by Ripple CTO drew reactions from leading crypto aficinados, which included John Deaton, the researcher of Crypto-Law.US. Attorney Deaton valued Schwartz for a tip top examination of the judgement highlighting that some of the top-ranking legal studies tend to be established by non-lawyers.
Moreover, Ripple’s Chief Legal Officer, Stuart Alderoty, left a response to the Terra trial. He let people know directly that Judge Rakoff’s the judgement does not adjust the result relating to the Ripple lawsuit, that is, XRP is not examined a security.