• U.S. District Judge Jed Rakoff rejected the summary judgment by Judge Analisa Torres.
• The SEC has already told the court that it plans to appeal Judge Torres’ finding.

To prosecute its fraud case against Terraform Labs and its founder, Do Kwon, a New York federal court has ruled that the U.S SEC may proceed with the case. Nonetheless, the court let the securities regulator go forward, contradicting a prior finding by colleague Judge Analisa Torres, who found that secondary market XRP transactions weren’t considered an investment contract.

Bloomberg states that U.S. District Judge Jed Rakoff rejected the summary judgment by Judge Analisa Torres, allowing the SEC’s action against Do Kwon and Terraform Labs to go forward.

The Judge stated:

“The court declines to draw a distinction between these coins based on their manner of sale, such that coins sold directly to institutional investors are considered securities and those sold through secondary market transactions to retail investors are not.”

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No Relief for Defendants

In an earlier effort to have the SEC case against Do Kwon dismissed, the legal team relied on a judgment by Judge Torres. The attorneys requested that the court recall the summary judgment, which had ruled that secondary market XRP did not constitute a security.

Kwon’s attorneys contended that Ripple’s partial success in court showed the SEC had no basis in law to classify most cryptocurrencies as securities. The attorneys emphasized Judge Torres’s difference between institutional and programmatic sales. But Judge Rakoff wouldn’t accept that distinction.

The SEC has already told the court that it plans to appeal Judge Torres’ finding in its complaint against Ripple, and at the hearing against Terraform and Do Kwon, it asked Judge Rakoff to disregard the summary judgment.

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