XRP is Not a Security As Terra Case Changes Nothing About Ripple Ruling: Stuart Alderoty

The Chief Legal Officer of Ripple has clarified that the recent ruling in the TerraForm Labs’ case does not change the fact that XRP is not a security.

In a tweet today, Ripple’s chief legal officer Stuart Alderoty reacted to the widespread confusion regarding a recent ruling in the lawsuit between the SEC and TerraForm Labs.

Federal Judge Rejects Ripple Ruling

For context, US District Judge Jed Rakoff rejected TerraForm Labs’ approach to use Judge Torres’ decision in the Ripple case to dismiss the SEC’s lawsuit against the company and its founder, Do Kwon.

Recall that Judge Torres drew a distinction based on how Ripple sold XRP to investors. In the ruling, Judge Torres found that Ripple’s XRP sales to institutional investors were securities. In contrast, she ruled that the company’s programmatic sales on digital exchanges were not securities.

Interestingly, TerraForm Labs used Judge Torres’ ruling as a legal precedent to dismiss the SEC’s case.

However, the SEC filed a countermotion stating that Judge Torres’ erred in her ruling. In response, Judge Rakoff rejected Judge Torres’ ruling, thus questioning Ripple’s victory.

According to Judge Rakoff, cryptos should not be differentiated based on how they are sold.

Ripple Chief Legal Officer Reacts

Meanwhile, the decision has stirred confusion in the market, prompting Alderoty to provide clarity. In his tweet, Alderoty said Judge Rakoff’s ruling does not change the fact that XRP is not a security.

Let me be clear about some confusion going around – the ruling in the Terra case changes NOTHING about the Ripple ruling that XRP is not a security. Also… https://t.co/PhaVix7HM4

— Stuart Alderoty (@s_alderoty) July 31, 2023

He argued that the TerraForm Labs’ case is still in its early stages. Consequently, the judge presiding over the case will mostly accept everything the SEC alleges as true.

Furthermore, Alderoty clarified that Judge Torres issued her decision in the Ripple lawsuit after a full factual record developed for over two years was presented in the court.

Alderoty Invites Other Legal Experts For Comment

Ripple’s chief legal officer invited other legal experts to provide an analysis of Judge Rakoff’s comment on the Ripple ruling.

2/ I'll let others dive into the Terra Judge’s comment, including his apparent misreading of the Ripple Judge’s reasoning – ex: missing the point that secondary market traders can’t “invest money” in anyone or anything if they don’t know who they are buying from.

— Stuart Alderoty (@s_alderoty) July 31, 2023

Notably, top lawyer Jeremy Hogan has already declared his intention to weigh into the matter. Attorney Hogan noted that he would make a video to explain the development.