The Ripple decision 'resides on shaky ground, [and] is likely (and ripe) for appeal,' believes former SEC official John Reed Stark.
Judge Torres' verdict states that XRP token was a security when sold to institutional investors, but that it wasn't a security in 'programmatic sales' [public sales] and 'other types of sales', such as token distribution to employees. Ripple also faces a penalty for the alleged violation, as well as a rescission for institutional investors — whose sales reportedly involved $720 million.
For Stark, the decision establishes a"class of quasi-securities that discriminates" based on the sophistication of the investor buying the token. Stark also notes that this argument seems contrary to investors protection principles, which state that an investor's level of protection should not be affected by whether they read materials related to the purchase of an asset."Securities laws were specifically designed to protect individual investors, based on the idea that they can’t fend for themselves [...]. The Ripple decision turns this notion on its head," Stark noted.
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