The U.S Securities and Exchange Commission (SEC) is reportedly asking a federal judge to pay no heed to the recent groundbreaking court ruling in favor of Ripple Labs and XRP.
According to a new report by Bloomberg, the SEC says that the decision, which was a ruling that Ripple Lab’s automated, open-market sales of XRP don’t count as securities transactions, goes against existing securities laws.
The move by the SEC highlights the potential for the agency to make an appeal on the ruling.
The ruling also declared that sales of XRP to institutional investors violate securities laws, but that sales of the digital asset to retail investors directly through crypto exchanges did not. The SEC is asking the court to ignore the “artificial distinction” between the expectations of retail and institutional investors, which the regulator says was created by the ruling.
The SEC adds that the ruling improperly changes the Howey Test, a method created by the Supreme Court decades ago to determine whether an asset counts as a security or not.
Last week, Ripple Labs CEO Brad Garlinghouse said that the ruling has put the regulatory body in check as its enforcement actions have been stifling innovation in the industry while calling for lawmakers to create clear crypto guidelines.
The SEC first sued Ripple Labs in December 2020, alleging that the firm was selling XRP as an unregistered security.
The favorable ruling had a significant impact on XRP as it rallied from $0.42 on July 3rd to $0.82, about a 95% increase. The crypto asset has since retraced and is trading for $0.74 at time of writing.
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