The last remaining element in the Ripple vs. SEC case is the one factor that has been troubling experts around the world: the issue of XRP secondary sales. Now that the final appeal window is open for 60 days, this has reignited discussions about whether XRP secondary sales should be classified as securities.
This question has become central following the SEC’s recent Wells notice against NFT marketplace Opensea, which alleges that certain non-fungible tokens (NFTs) qualify as securities.
While Judge Torres did not rule explicitly on secondary sales in the Ripple case, she noted that a “programmatic buyer is in the same position as a secondary market buyer.”
Many interpreted this statement as an acknowledgement that secondary sales are not securities.
Legal experts weigh in on secondary sales
Former SEC attorney Marc Fagel and pro-XRP attorney Bill Morgan both weighed in on the issue. Fagel agreed that while Judge Torres did not directly address secondary market sales, her comparison of programmatic sales to secondary market transactions strongly suggests that they are not securities.
Morgan also pointed out that in Ripple vs. SEC, Judge Torres ruled that XRP itself was not a security, thereby undermining the SEC’s broader claims. This perspective aligns with other recent decisions in the cryptocurrency space, including the decisions in the cases involving Kraken and Binance, where the courts have emphasized the need to distinguish between the nature of a crypto asset and its sale.
The SEC’s Dilemma: To Appeal or Not to Appeal
Additionally, as the SEC considers its next move, it faces a difficult decision. The agency has about 40 days to appeal Judge Torres’ decision, but doing so carries significant risks. If the SEC were to lose an appeal before the Second Circuit Court, it could set a binding precedent that would affect future cases involving crypto assets.
The Second Circuit Court of Appeals has already ruled in favor of Coinbase, holding that secondary market sales of cryptocurrencies are not securities, adding weight to the argument against the SEC’s position. Many believe the SEC will likely avoid appealing the Ripple case due to the potential consequences.
XRP on thin ice
XRP price has remained relatively stable, trading just below $0.60 despite the ongoing legal uncertainty. Over the past 24 hours, XRP has seen a modest 1% increase, fluctuating between $0.566 and $0.576. However, trading volume has decreased by 40%, reducing traders’ interest.
Despite this, there is some optimism that September could bring a bullish turn for XRP, with forecasts suggesting a potential rally to $0.75 or even $1. Ripple’s strong fundamentals and increased whale activity on XRP futures are seen as positive indicators for a price breakout soon.
Also see: What was the real reason for French President Emmanuel Macron’s dinner with Telegram CEO Pavel Durov years ago?
