Lawyer: US SEC has to appeal after ruling on XRP

By July 17, 2023 In Ripple

In the aftermath of Ripple’s victory over the United States Securities and Exchange Commission (SEC), retired securities lawyer Marc Fargel shared his skeptical insights on social media. Despite his reservations, he acknowledged that crypto enthusiasts should find solace in certain aspects of the ruling.

SEC’s secondary market trading claims

Fargel is concerned that the court’s reasoning may challenge the SEC’s claims about secondary market trading of assets, including cryptocurrencies. He argues that Howey concerns economic reality and has no rational basis for such disparate treatment.

I have no skin in the game and don’t really care. My opinion is that both sides will appeal, and the SEC has a better than even chance of getting the ruling on the “programmatic sales” reversed.

Consequently, he predicts investors cannot expect profits from a third party if an asset is indirectly purchased. However, this conclusion may be reversible.


Clarifying his stance, Fargel stated that he had no vested interest in the case. However, he believed both sides would appeal, adding that the regulator had a slightly better chance of reversing the ruling on “programmatic sales.”

Not appealing the ruling, he reasons, might affect pending cases, especially the one tied to Coinbase, Binance, and the rest.

“I don’t see how they don’t appeal this; setting aside the Ripple case itself, the court’s reasoning, if followed, jeopardizes future cases (particularly the pending cases against crypto exchanges).”

XRP is not a security, lawyer asserts

In response to Fargel’s comments, John Deaton, a pro-XRP lawyer, chimed in. Even though he is concerned about the possibility of prolonged legal battles, he sees a silver lining amidst the general uncertainty.

Also, I would be shocked if Ripple would agree to an interlocutory appeal in order to cross-appeal on ODL sales, for example. If I represented Ripple or the two executives I would jump out of my seat and pound the table as hard as I could objecting to an early appeal, citing that…

He believed that even if the SEC were to win an appeal on programmatic sales, the court’s determination that XRP itself is not a security would remain unshaken.

Moreover, Deaton doubted whether Ripple would agree to an interlocutory appeal regarding on-demand liquidity (ODL) sales of XRP while emphasizing the urgency of a fair and swift resolution.

Deaton said the case took three years, not to mention the 30-month investigation cast a shadow over the company and its executives, including Brad Garlinghouse, the CEO.

In his argument, Deaton said the SEC’s victory on some sales was due to the Howey test being applied to the presented facts. Specifically, he objected to an early appeal becoming the prevailing law for the next two to three years.

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