The SEC is appealing the recent court ruling in the Ripple case, even though it lacks strong evidence to support its claims. The agency is struggling to prove that XRP buyers expected profits based on Ripple’s efforts.
Judge Torres ruled that Ripple’s actions, including the sale of XRP held in escrow, did not influence price movements enough to establish investor expectations of profit.
The SEC’s case now depends on convincing the appeals court that these programmatic buyers wanted returns based on Ripple’s operations. The SEC wants to argue this point even though the court rejected their own expert testimony on this matter.
The expert opinion, which was key to the SEC’s argument, was dismissed due to lack of a reliable methodology. Defendants successfully argued that the expert’s assumptions about what a “reasonable XRP purchaser” believed were speculative and not based on facts. This means the SEC doesn’t have solid expert testimony to support its claims.
Also, hurting the SEC’s appeal is the evidence from real XRP investors. Court filings show that these investors did not rely on Ripple’s efforts when purchasing XRP. Many didn’t know about Ripple’s initiatives or their impact on XRP. Even so, the SEC is still trying to argue that a “hypothetical reasonable investor” could have expected profits from Ripple’s actions based on old blog posts or marketing materials.
Plus, Ripple’s efforts to develop products like the On-Demand Liquidity (ODL) software, which uses XRP for cross-border transactions, didn’t really affect XRP’s price. This was stated by actual members of the XRP community. For these investors, Ripple’s announcements didn’t affect their decision to invest.
The SEC is trying to convince the second circuit court, but its case seems to be missing crucial elements. Their expert testimony has been rejected, and there isn’t much evidence from real investors to support their claims.
The SEC must now rely on the legal fiction of a hypothetical investor, hoping to prove that this fictional individual expected profits from Ripple’s efforts, despite not having much concrete proof.
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