- SEC officially commented on new details in the Terraform Labs case. The company’s lawyers had earlier filed a mandate appealing the court’s ruling in the Ripple Labs trial.
- The regulator considers this outcome “erroneous”. It also said in a statement that the court should view the ruling in the case in favor of the SEC and not allow Terraform Labs to interpret it any differently.
The U.S. Securities and Exchange Commission (SEC) has filed a new petition in the proceeding against Terraform Labs and its co-founder Do Kwon. In them, the regulator calls the court’s decision in the Ripple Labs case “erroneous” and also reiterates plans for an appeal:
“Despite assertions to the contrary, the ruling for the most part supports the SEC in this case [the Howey test]. The decision in the case was erroneous, and the court should not follow it in this case [against Terraform Labs],” the documents said. </nbsp;
The SEC also confirmed plans for an appeal:
“Our staff continues to review the case [against Ripple Labs] for additional opportunities for further review and intends to recommend pursuing them.”
The regulator insists Terraform Labs introduces an artificial divide between the expectations of professional and retail investors. The court’s endorsement of this practice would lead to the “Howey test” being misinterpreted, the ruling said.
The SEC says the court’s decision in the Ripple Labs litigation is a win for the regulator, not the company:
“The court is required to make correct inferences in our favor, including that large investors, such as firms that bought XRP without restrictions on subsequent resale, viewed Terraform Labs’ assets as an opportunity to invest directly in the organization itself.”
Reminder, lawyers for Terraform Labs previously filed a manifesto in a lawsuit with the SEC. In it, they used the Ripple Labs decision as the basis of their line of defense.
The company did win a partial victory after the court ruled that selling XRP on trading platforms is not a violation of the Securities Act. SEC Chairman Gary Gensler, for his part, said he was disappointed with the outcome. Earlier, the Incrypted team broke down the process with a representative from law firm Juscutum. More details at the link.