SEC v. Ripple: Congressman Sherman Slams Judge Torres Ruling, Says It’s “Ridiculous”

The congressman has criticized Judge Analisa Torres’ ruling in the SEC v. Ripple lawsuit.

Numerous legal experts and policymakers have been providing commentary on Judge Analisa Torres’ summary judgment ruling in the high-profile SEC v. Ripple litigation.

The ruling, which Judge Torres issued on July 13, has garnered praise and criticism from policymakers. As reported, US Congressman Ritchie Torres (NY-15) applauded the verdict, saying the SEC needs to rethink its stance on crypto regulation after the judge rejected its gross overreach.

Sherman Criticizes the Ruling

However, Rep. Brad Sherman, a California Democrat, has a different view from his colleague. Rep. Sherman’s commentary on the judgment came up yesterday during the House Financial Services Committee’s efforts to markup legislation to provide clear rules for the crypto industry.

Unlike Rep. Torres, Rep. Sherman described Judge Torres’ ruling as ridiculous. In his remark, the US Rep. criticized the judge for indirectly saying that XRP is “sometimes a security and sometimes not.” 

It is worth noting that Fox Business journalist Eleanor Terrett shared the development on Twitter yesterday.

?NEW: @BradSherman calls the @Ripple outcome “ridiculous”, criticizing the judge’s ruling that XRP is “sometimes a security and sometimes not.”

Watch the markup live here??https://t.co/KqfDqR9LCM

— Eleanor Terrett (@EleanorTerrett) July 26, 2023

Sherman’s Anti-Crypto Stance

Rep. Sherman’s recent statement would likely come as no shock to many in the crypto community. The US Congressman has consistently been outspoken in his opposition to cryptocurrencies. He previously advocated for a blanket ban on digital assets by contending that wrongdoers predominantly utilize them.

Unsurprisingly, Sherman has been firmly against crypto, given his relationship with traditional financial institutions.

According to OpenSecrets.org data, Rep. Sherman received campaign donations from traditional financial institutions, including Fidelity Investments, Capital One Financial, and Blackstone Group.

Other Critics Slam Judge Torres’ Verdict

Meanwhile, critics have slammed Judge Torres’ ruling, especially her reasoning regarding Ripple’s programmatic XRP sales on digital exchanges and the company’s past sales to institutional clients.

For context, Judge Torres ruled that Ripple’s programmatic XRP sales on secondary markets do not constitute securities. However, she found that the company’s sales to institutional investors are securities.

The judge noted that while institutional investors expected profit from Ripple’s efforts, retail traders did not have similar expectations. Additionally, the judge also ruled that XRP itself is not a security.

Consequently, critics argue that the ruling is inconsistent, thus speculating that a higher court will reverse the decision.

At press time, the SEC has yet to file an interlocutory appeal challenging Judge Torres’ decision. However, the commission revealed that it is considering multiple options to review the ruling.

Judge Torres to Issue Same Decision After Appeal

Interestingly, Crypto-Law founder John Deaton believes the SEC will not be successful at appealing the ruling.

However, if the commission successfully appealed the ruling, Deaton speculated that the case would be remanded and Judge Torres would still rule that programmatic sales are not securities.

In this scenario, Deaton said the judge would rely on the second prong of the Howey test- common enterprise. Per Deaton, the SEC did not satisfy the common enterprise factor of the Howey test.