The Ripple v. SEC Case Resembles Moby Dick: The Company’s CLO Explains Why
2024-10-22

TL;DR
What Does the SEC Hope for?
The legal tussle between Ripple and the US Securities and Exchange Commission (SEC) seems nowhere near its end following the latest move by the agency. Recall that it officiallyappealeda 2023 verdict of Judge Analisa Torres, which determined that the firm’s XRP sales to retail investors on crypto exchanges did not violate US securities laws.
This means that the case will enter a new phase comprised of filings and a briefing process, with its official end most likely delayed for another few years.
Several industry participants gave their two cents on the possible consequences of the appeal. One of those is Ripple’s chief legal officer – Stuart Alderoty. He claimed that the Second Circuit Court of Appeals will either affirm Judge Torres’ decision or expand it.
“The best the SEC can hope for (and it’s a remote hope) is a remand,” Alderoty added.
The exec also outlined the SEC’s attempt to file an interlocutory appeal, which was denied by Judge Torres earlier this year. Back then, the magistrate clarified that “Howey” and all of Ripple’s defenses, including Fair Notice, would then “be back on the table.”
“The Fair Notice standard asks if a person of ‘ordinary intelligence’ was aware of what the law prohibited. The SEC could end up arguing to Judge Torres that she wasn’t a person of ‘ordinary intelligence’ when she ruled against them. Awkward,” Alderoty maintained.
According to Ripple’s CLO, the lawsuit has always resembled the adventurous novel Moby Dick, with the SEC’s Chairman Gary Gensler stepping into the shoes of Captain Ahab. To those who haven’t read the book, Captain Ahab is a central figure with an obsessive quest to hunt a particular white whale, which had previously injured him. His relentless desire, though, eventually leads to his tragic death and the sinking of the ship he was in charge of.
Alderoty thinks that the latest series of events have now made the case look like Moby Dick meets My Cousin Vinny (an American comedy film about a rookie lawyer who defends his cousin).A Chicken Move?
Another person who chipped in is the US attorney Jeremy Hogan. He explained that the Commission appealed the ruling involving Ripple’s sales of XRP on exchanges and the use of the token as a kind of payment. On the other hand, he outlined that it did not contend with its non-security status.
Hogan described the SEC’s action as a “chicken move,” claiming it “completely folded when it had the opportunity to actually try the case against Garlinghouse and Larsen in front of a jury.”
“What I like? This appeal is about money. The injunction could change if Ripple were to lose, but only indirectly (as to order compliance),” Hogan concluded.