Bill Morgan, an Australian-based attorney who specializes in cryptocurrency law, recently provided insights into the ongoing involvement of the Securities and Exchange Commission (SEC) in the crypto sector.
SECβs Battle with Ripple and XRP
In July 2023, U.S. District Judge Analisa Torres delivered a detailed verdict in the legal dispute between the SEC and Ripple Labs. The SEC accused Ripple Labs, along with its senior leaders Bradley Garlinghouse and Christian A. Larsen, of illegally issuing and selling unregistered securities in the form of XRP tokens. The court’s decision was split, with some aspects favoring the SEC and others favoring Ripple. Notably, the court denied the SEC’s motion for summary judgment on the aiding and abetting claims against Garlinghouse and Larsen.
SECβs Battle Against NFTs
In September 2023, the SEC charged Stoner Cats 2 LLC (SC2) for conducting an unregistered offering of crypto asset securities through Non-Fungible Tokens (NFTs). SC2 sold these NFTs to fund an animated web series called “Stoner Cats.” The SEC highlighted SC2’s marketing tactics that emphasized the benefits of owning these NFTs and configured them to provide a royalty for each secondary market transaction. As a result, SC2 raised around $8 million in just 35 minutes. To resolve this matter, SC2 agreed to a cease-and-desist order, a $1 million civil penalty, and the destruction of all NFTs in its possession or control.
Impact on Other Altcoins
Bill Morgan noted that settlements like these contribute to the SEC’s growing influence over the crypto industry. He emphasized the significance of Ripple Labs’ legal battle with the SEC, stating that if Ripple had not taken the SEC to court, most cryptocurrencies other than Bitcoin could have been automatically classified as securities. Morgan also highlighted the regulatory uncertainty surrounding Ripple’s sales and usage of XRP due to the ongoing appeal process. Additionally, he pointed out that Ripple’s primary focus is on serving its shareholders and clients rather than XRP holders.
Hot Take: Ripple’s Legal Battle Shapes Crypto Industry
The ongoing legal dispute between Ripple and the SEC has significant implications for the entire crypto industry. While Judge Torres ruled that XRP is not a security, the SEC’s appeal and subsequent rulings may still affect Ripple’s operations and relationships with its clients. It is crucial for crypto companies to navigate regulatory challenges and ensure compliance to maintain stability and legitimacy in the industry.
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