Lynn Johannson, Advisor, Sustainability and ESG
January 4th, 2024
Lynn Johannson, President of E2 Management Corporation and Catalyst for THE Collaboration
In a care[...]
SEC Appeals Ripple Ruling; Veri Token Holders File Complaint
Ripple | Oct 7, 2024
SEC Files Notice of Appeal in XRP Case As VeriDAO Token Holders File Complaint Against Acting Crypto Chief
On October 2, 2024, the SEC filed a notice of appeal after judge 2023 ruling by Judge Analisa Torres that Ripple's XRP tokens were considered securities when sold to retail investors. Adding to the complexity of the discussion in focus, Veri token holders who were also a party in the SEC vs Ripple case have filed a complaint against the SEC (Acting) Chief of the Crypto Asset and Cyber Unit for regulatory overreach and questionable enforcement practices that stifled innovation in the U.S. digital asset market.
Background
In December 2020, the SEC sued Ripple Labs CEO Brad Garlinghouse and co-founder Chris Larsen claiming that XRP was sold as an unregistered security. After significant a prolonged back and forth case, in 2023 Judge Analisa Torres ruled a mixed outcome saying that XRP was not deemed a security when sold to retail investors (win for crypto industry), yet institutional sales made by the founders of Ripple were in fact an unregistered securities offering.
See: SEC Enforcement Chief Grewal Leaves to Join Milbank LLP
The recent filing by the SEC on October 2 is an appeal to the courts in attempt to reverse some of the verdict. While the appeal was predicted by industry, it clouds the potential of a recent application by Bitwise to register an XRP exchange-traded fund (ETF) out of Delaware.
Bar Complaint Against Jorge G. Tenreiro
Crypto advocates have now focused their attention on Jorge G. Tenreiro who played an important role in several enforcement cases including XRP, VERI, and TON projects. Veri token holders have filed a complaint against Tenreiro who is currently the (Acting) Chief of the SEC's Crypto Asset and Cyber Unit, highlighting misconduct and overreach (i.e., misleading evidence and aggressive tactics) while linking similarities between his acts in the VERI case and the Ripple case.
The crypto community is hoping to have their complaint validated, which would lead to disciplinary action against Tenreiro and a re-examination of previous SEC actions under his oversight.
See: Inside Federal Securities Laws and Crypto’s Tightrope
Such a result may have significant implications for crypto and how the SEC handles future cases. You can learn more about the New York bar complaint against Jorge Tenreiro for professional misconduct here.
Outlook
The outcome of the SECs Ripple appeal and bar complaint against the SEC's Jorge G. Tenreiro is of major significance to retail investors, token holders and the entire crypto industry, as the dispute will likely influence crypto in the U.S. and around the globe.
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