Chairman of the U.S. Securities and Exchange Commission (SEC) Gary Gensler said the agency was “disappointed” by the court’s ruling in the Ripple case with respect to retail investors, but “quite pleased” with the verdict concerning institutional sales.
“We are still reviewing and evaluating this opinion,” the official stressed.
When asked about drafting new rules for the crypto industry, Gensler said it was still “too early,” citing the ongoing litigation. However, he reminded of the existing rules for securities exchanges.
The regulator filed a lawsuit against Ripple in 2020, accusing the company of distributing unregistered securities in the form of the platform’s native tokens.
On July 13, 2023, Judge Analisa Torres ruled that the sales and other distributions of XRP did not constitute an offer or sale of investment contracts.
However, purchases of the coins worth more than $700 million by major players still violated U.S. law. Torres granted the SEC’s motion for a summary judgment on this issue.
Brad Garlinghouse, Ripple’s chief executive, and Chris Larsen, the company’s chief executive, now face a jury trial. It will decide whether the top executives are liable for the unlawful sale of tokens to institutional investors.
Former SEC lawyer John Reed Stark called the Ripple verdict ‘shaky’. He did not rule out that the agency would appeal the ruling, and that a higher court could overturn decisions related to ‘programmatic’ and ‘other sales’.