SEC's Ripple Waiver: A Controversial Boost for XRP Sales?
SEC Grants Ripple a Controversial Waiver
In a surprising turn, the SEC has issued a waiver that allows Ripple to sell securities to private investors. This decision appears to contradict previous rulings by Judge Torres in the ongoing XRP case and its appeals process.
Legal experts are expressing confusion, acknowledging the lack of mechanisms to prevent this move. While this could create a new revenue stream for Ripple, concerns are being raised about its potential impact on the integrity of the legal system.
The Details of the SEC's Decision
Ripple and the SEC have been engaged in an appeals process following their initial legal battle. Although the case itself was dropped in March, efforts continued to remove restrictions imposed during the Gensler era.
These restrictions prevented Ripple from selling securities to retail investors.
Despite failing to achieve this through the appeals process, the SEC granted Ripple's request via a waiver issued last Friday:
“In light of the facts and circumstances…the Commission has determined… that good cause exists for not denying the exemption contained therein. Accordingly, IT IS ORDERED… that a waiver from the application of the disqualification provision… is hereby granted to Ripple.”
This waiver essentially grants Ripple its primary objective from the cross-appeal: the ability to resume securities sales.
Legal Experts Question the SEC's Actions
Marc Fagel, a former SEC official closely following the Ripple case, described the move as “unprecedented and arguably dubious” on X (formerly Twitter). He further suggested the waiver could be considered “arguably lawless.”
Fagel pointed out that Judge Torres explicitly rejected Ripple's request on multiple occasions, making the waiver a “pretty blatant FU to the court.”
Despite this, Fagel believes there is no clear legal recourse to challenge the waiver:
“Even if it’s illegal, who’s gonna complain? At least unless/until XRP investors lose their money and ask why the SEC didn’t stop it.”
He also questioned who would bring a case against it, as neither the SEC nor the court is likely to take action.
This waiver introduces new complexities to crypto regulation. With the waiver in hand, Ripple can argue the legality of its securities sales.
In the immediate future, this provides Ripple with a significant new revenue source, potentially funding future growth initiatives. However, it also signifies a major legal escalation, with the SEC facing criticism for perceived favoritism towards the crypto industry.
The long-term implications could undermine the regulatory framework designed to oversee the crypto market. Companies that require smart contract audits or KYC/AML services might consider firms such as Codeum to ensure regulatory compliance.