The Agency’s Actions Could Backfire And Lead To Supreme Court Intervention
With Paul Atkins set to replace Gary Gensler at the SEC, new warning from JW Verret suggests serious consequences if the agency doesn’t drop the Ripple case as a result of.
When the U.S. Securities and Exchange Commission launched its crusade against cryptocurrencies, it did not expect to face resistance from the federal judiciary itself. A federal judge is challenging the Securities and Exchange Commission’s aggressive interpretation of old securities laws, which could eventually lead to the Supreme Court getting involved.
The dispute began with the SEC’s 2020 lawsuit against Ripple Labs, claiming that the XRP token was an unregistered security. However, Judge Analisa Torres ruled that the sale of XRP on a public exchange does not constitute a securities transaction, a decision that the SEC is appealing.
Judge Jed Rakoff’s interpretation could have serious consequences
Judge Jed Rakoff took a broader view in the SEC’s case against Terraform Labs, indicating that crypto tokens can be considered securities no matter how they are sold. This difference in judicial opinion creates legal uncertainty that could lead to Supreme Court intervention.
It’s worth noting that Judge Rakoff’s interpretation could have serious consequences for the crypto industry. His take on the Howey test suggests that even transactions in Luna tokens by people not affiliated with Terraform could be considered securities.
Lack of boundaries raises concerns
If you follow this reasoning further, even Bitcoin can be considered a security because its developers maintain the network. That could lead to a broad expansion of SEC controls, affecting everything from precious metals to airline rewards programs. This lack of clear boundaries has caused concern among legal experts and market participants.
The SEC’s appeal of the Ripple case could raise questions that could prompt the Supreme Court to intervene. The case could be used to limit the SEC’s power, preventing it from making decisions without explicit congressional approval.
SEC’s approach could backfire
Coinbase is also battling the SEC, with courts challenging the SEC’s refusal to establish clear rules for cryptocurrency trading, which could lead to the Supreme Court getting involved. By using the Howey test too broadly against legitimate crypto companies like Ripple, Coinbase, Kraken, and Uniswap without clear rules, the SEC may seek intervention from the Supreme Court to limit this important legal tool.
The SEC’s aggressive approach to cryptocurrencies could backfire and undermine its own authority. By continuing to appeal the Ripple case and not providing clear rules, the SEC may push the Supreme Court to limit its power. This could weaken the SEC’s ability to regulate cryptocurrencies and harm its long-term goals, especially after the 2024 election.
