Gary Gensler still thinks XRP was a security in last SEC filing
Outgoing Securities and Exchange Commission (SEC) Chairman Gary Gensler has filed a document that will probably be his organization’s final lawsuit against a crypto promoter. The document explains why a crypto industry-redefining ruling about Ripple’s XRP was supposedly a tragic error.
In the SEC’s new appeal to the Second Circuit, commissioners revisit the landmark ruling by the US District Court for the Southern District of New York — concluding that it was a huge mistake.
In that widely misinterpreted ruling, judge Analisa Torres decided that Ripple didn’t illegally offer $757 million worth of unregistered securities via programmatic sales of XRP to retail buyers.
Within hours, that determination sparked a 60% rally of the XRP token and spread misconceptions like the belief that “no blockchain token is ever a security” or that somehow the SEC never has jurisdiction over crypto exchanges.
Fans of the decision preferred to ignore US courts’ long history of agreeing with most of the SEC’s enforcement complaints against crypto miscreants. Indeed, sober statistics prove that the SEC prevails in the overwhelming majority of its crypto lawsuits.
In spite of this evidence, Torres’ XRP decision sparked mobbish derision of Gary Gensler’s career.
Hashtags like #FireGaryGensler trended on social media and well-funded crypto investors cranked up their media machine to whip up animosity against Gensler even more than the laws he enforced.
Media pressure mounted and eventually, Gensler decided to announce his resignation. As of Donald Trump’s January 20 inauguration, Gensler will resign as SEC chairman.
Gary Gensler’s final view on secondary crypto sales
His departure two business days from today makes his latest filing against Ripple all the more significant.
In essence, it’s the Gensler-led team’s final explanation of how altcoin lawyers have twisted legal words to get around Congress’s intent in establishing safeguards for common investors in an industry where over 99% of the millions of coin offerings have declined to near-$0.
In the Gensler-led appeal, SEC commissioners argue that Torres mistakenly concluded that Ripple’s programmatic sales of XRP to retail investors did not constitute securities offerings. Commissioners contend that Ripple misled retail investors into expecting XRP to rally based on Ripple’s efforts, regardless of whether they knew they were purchasing XRP programmatically or from Ripple directly.
The SEC revisits Ripple’s extensive public marketing campaign, which promoted Ripple’s efforts to increase XRP’s value.
Commissioners also argue regarding the irrelevance of seller identity, asserting that the Supreme Court’s Howey Test requirement that investors expect profits does not depend on investors knowing the identity of the seller.
They also dive into legal standards for an objective investment decision and intermediary-assisted securities offerings.
Finally, the SEC reiterates its view that all XRP units are fungible, making their price irrelevant to the seller’s identity. This further supports the argument that programmatic retail sales should be treated similarly to institutional, contractual sales.
Read more: SEC wants 2nd Circuit to overrule Ripple XRP decision
At over 100 pages, the Gensler-led appeal is probably the final document that crypto investors will have as his counterargument against the ongoing views of pro-altcoin lawyers.
Trump’s transition team will be recommending a new SEC chairman starting next week, and Gensler’s views will fade in relevance from the five-seat commission.
Regarding Ripple’s offerings of XRP and its implications for the securities status of millions of altcoins — that decision is now in the hands of the US Court of Appeals for the Second Circuit.
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