Ripple’s Legal Tug-of-War Intensifies: U.S. District Judge Steps in Amid Ex-SEC Official’s Warning

• Ripple’s ongoing lawsuit with the SEC takes a twist as a former SEC official suggests the regulatory body may already be in “big trouble”.
• U.S. District Judge Jed Rakoff rejects a crucial aspect that previously favored Ripple and XRP.
• The conflicting rulings have caused a stir in the crypto and stock markets.

The Securities and Exchange Commission (SEC), in a surprising turn of events, finds itself in a precarious position in its ongoing lawsuit against Ripple. A former SEC official has voiced concerns that the regulatory body may already be in “big trouble” due to the recent developments in the case. This comes on the heels of a significant ruling by U.S. District Judge Analisa Torres, which favored Ripple and its native cryptocurrency, XRP.

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However, in a conflicting development, U.S. District Judge Jed Rakoff, presiding over a separate case involving Terraform Labs and Do Kwon, rejected a crucial aspect that previously favored Ripple and XRP. This decision contradicts Judge Torres’s verdict, which determined the securities status of tokens based on how they were sold.

Judge Rakoff’s ruling does not differentiate digital assets based on how they are sold, stating that whether tokens are sold to large institutional investors or through secondary market transactions to retail investors, should not be used to determine the securities status of digital assets.

This legal tug-of-war has sent ripples through the crypto and stock markets. Coinbase shares dipped and XRP’s price retraced by about 1.9% following the news. However, it’s worth noting that Rakoff’s decision has no immediate impact on Ripple and XRP unless the SEC decides to file an appeal. If the SEC chooses to appeal Judge Torres’s verdict, Rakoff’s ruling could potentially strengthen the SEC’s case against Ripple.

The future of Ripple and XRP in the crypto space remains uncertain, with the outcome of the lawsuit playing a significant role. However, Ripple’s innovative technology and XRP’s potential for facilitating fast, low-cost international money transfers could see them play a significant role in the future of the financial industry, regardless of the lawsuit’s outcome.

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