Ripple’s chief legal officer has shed light on the Terra judge ruling.
Stuart Alderoty, Chief Legal Officer at Ripple, has provided further insight into the recent ruling on TerraForm Labs, where a federal judge rejected Judge Analisa Torres’ distinction of XRP sales.
Alderoty Provides More Clarity
It bears mentioning that Judge Rakoff’s comment on the Ripple decision has been a significant topic of discussion within the crypto community. Former SEC official John Reed Stark said the Ripple decision is already in big trouble following Judge Rakoff’s comment.
Interestingly, Alderoty believes the Terra case has no implications on the Ripple ruling. According to Alderoty, the Terra judge’s comment on the Ripple ruling is unnecessary, confusing, and unbinding.
3/ Tokens alone that are not intermingled with other rights and promises are not themselves securities (p. 33)
4/ The comment about the Ripple ruling is unnecessary, confusing and non-binding
— Stuart Alderoty (@s_alderoty) August 1, 2023
The renowned lawyer made this known after going through the Terra ruling again. While many critics are focused on Judge Rakoff’s refusal to follow Judge Torres’ distinction of Ripple’s XRP sales, Alderoty shared other parts of the ruling that align with Ripple’s defense.
He said Judge Rakoff agreed that orange groves alone are not securities without any promise to cultivate the groves and share the profits with investors.
Additionally, the Terra judge said that contracting parties need to agree for there to be an investment contract.
Lastly, the judge agreed that tokens not mixed with other promises and rights do not constitute securities themselves.
Alderoty Comments As Federal Judge Rejects RIpple Ruling
As reported yesterday, Judge Jed Rakoff, the judge presiding over the SEC v. Terra lawsuit, rejected the defendant’s motion to dismiss the case. The judge dismissed the motion, despite the company using Ripple’s verdict as a legal precedent.
According to the judge, crypto assets should not be distinguished based on how they are sold.
Notably, the development sparked a debate within the crypto community, prompting Alderoty to clear the confusion. In a tweet yesterday, he said Judge Rakoff’s refusal to follow his colleague’s reasoning does not change the fact that XRP is not a security.
He added that Judge Rakoff would mostly accept everything the SEC alleges as valid since the case had just started. Alderoty concluded his analysis by calling other legal experts to weigh in on the matter.
SEC Plans to Appeal Ripple Ruling
It is worth noting that the SEC labeled XRP a security in its lawsuit against Ripple Labs and two of its execs. However, Judge Torres ruled last month that XRP itself is not a security.
The judge also ordered that Ripple’s programmatic sales on digital exchanges are not investment contracts and concluded that XRP sold to institutional clients violated securities laws.
Meanwhile, the SEC has been disappointed with the ruling, as it threatens its enforcement action agenda against crypto businesses. Consequently, the securities regulator is considering the option of an appeal.