Patrick Daugherty on SEC v. Ripple – 'It's a key loss for the SEC'

Foley & Lardner LLP partner Patrick Daugherty assessed the key takeaways from a legal battle between the U.S. Securities and Exchange Commission (SEC) and a crypto industry player in the CoinDesk article, “What’s Next in SEC v. Ripple?“

Daugherty, who heads Foley’s Digital Assets, Web3 & NFT Practice within the firm’s Innovative Technology Sector, said that while both parties lost motions they may want to appeal, the ruling on secondary trades – which favored Ripple – is perhaps the most significant.

“It’s a key loss for the SEC because it takes the wind out of the SEC’s sails in other cases where tokens are trading on exchanges, especially if they’ve been trading there for years,” Daugherty explained.

Daugherty added that there is “no real guidance” in the injunction that was handed down to Ripple.

“Ripple Labs needs to avoid selling XRP the one way that the court held to be unlawful: as an institutional placement that did not comply with the requirements for an SEC registration exemption,” he commented. “This means that Ripple Labs can continue to sell XRP in ways that do comply, either because the offerings are off-shore or because private placement norms are satisfied.”