Billionaire investor Mark Cuban has highlighted Ripple’s impact in dispelling the notion that every crypto buyer should be labeled as an investor.
This comes in response to the recent SEC filing in the case against TerraForm Labs and its founder, Do Kwon, which has sparked reactions from the crypto community. In its response to Kwon’s motion to dismiss, the SEC criticized Judge Torres’ previous ruling in the Ripple lawsuit.
The SEC’s filing indicated plans to appeal the ruling that classified Ripple’s XRP sales to retail investors as non-securities. Cuban took issue with the SEC’s claim, particularly its characterization of all crypto buyers as investors.
During a discussion with Paul Grewal, Chief Legal Officer of Coinbase, Cuban expressed his disagreement with the SEC, citing Ripple’s recent victory over the commission as evidence that not all buyers should be classified as investors.
According to Cuban, securities serve the sole purpose of being a security, which emphasizes the distinction between crypto assets bought on centralized and decentralized exchanges. He believes that analyzing blockchain transactions reveals the utility of tokens and their role beyond investment purposes.
In response, Grewal compared the SEC’s regulatory approach to the concept of “if all you have is a hammer, everything looks like a nail,” coined by Abraham Maslow. Additionally, pro-XRP lawyer John Deaton expressed his agreement with Cuban’s assertion.
The SEC’s intention to appeal Judge Torres’ decision, despite Ripple’s significant win in the case, has added further complexity to the legal battle.
While the court ruled that Ripple’s programmatic XRP sales do not constitute securities, it acknowledged that sales to institutional investors met the criteria outlined in the Howey test.
The judge determined that institutional investors expected to profit directly from Ripple’s efforts, but the same expectations did not apply to buyers on secondary markets.
Notably, Do Kwon, the founder of TerraForm Labs, attempted to leverage Ripple’s victory to dismiss the SEC’s case against his company. However, the SEC remains determined to challenge Judge Torres’ decision, asserting its belief in the ruling’s erroneousness.
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