![]() ![]() The court held that the big institutional investors get SEC protection but the little retail traders not so much because they, unlike the big boys, don’t know how the crypto sausage is really made. Indeed, Ripple’s Programmatic Sales were blind bid/ask transactions, and Programmatic Buyers could not have known if their payments of money went to Ripple, or any other seller of XRP. ![]() Whereas the Institutional Buyers reasonably expected that Ripple would use the capital it received from its sales to improve the XRP ecosystem and thereby increase the price of XRP . . . Programmatic Buyers could not reasonably expect the same. Ripple case ruled that sophisticated VCs and other institutional investors were protected by the securities laws when buying Ripple’s XRP token but retail investors who bought through crypto exchanges or otherwise were not, because somehow the institutional transactions involved “securities” but the retail transactions did not under the SEC’s Howey testfor what qualifies as an “investment contract”. In mid-July, Manhattan, a federal-district court hearing the SEC vs. The reason? The most respected securities authority in the federal judiciary just stuck a polite but lethal pin into the -cough- curious reasoning behind the Ripple decision. Todd Baker is a senior fellow at the Richman Center for Business, Law & Public Policy at Columbia.Ī balloon filled with pure joy was flying over crypto land for a few weeks after a US district judge’s hearing the SEC’s Ripple case led the crypto faithful to declare victory over hated foe Gary Gensler and the SEC.īut you can now hear the balloon deflating rapidly.
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