A federal judge denied a motion by Terraform Labs and Do Kwon to dismiss the lawsuit by US Securities and Exchange Commission (SEC). The judge has also rejected Judge Torres’ landmark ruling in the US SEC v. Ripple Labs as precedent in the lawsuit. Ripple executives including CLO Stuart Alderoty and CTO David Schwartz clarify that Terra’s case will not change XRP status as non-security.
Judge Denies Terra and Do Kwon’s Motion to Dismiss SEC Lawsuit
US SEC lawsuit against Terraform Labs (TFL) and Do Kwon to proceed and Torres ruling doesn’t count as precedent, according to an order by Judge Jed Rakoff of District Court for the Southern District of New York (SDNY).
Judge Rakoff denied Terra’s motion to dismiss the lawsuit stating that the SEC has sufficiently argued it has jurisdiction and “asserted a plausible claim” that TerraUSD (UST), the Anchor Protocol, and LUNA may have violated securities laws.
“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. In doing so, the Court rejects the approach recently adopted by another judge of this District in a similar case, SEC v. Ripple Labs.”
Read More: Ripple Gets Former SDNY Attorney To Tackle US SEC Appeal, XRP Price To Rally 30%?
Will It Impact XRP Ruling and Terra Ecosystem Tokens?
Ripple chief legal officer Stuart Alderoty clarifies that Terra ruling will have no impact on Judge Torres’ classification of XRP as not a security. He believes that Judge Rakoff misread the reasoning in the Ripple vs SEC lawsuit including “secondary market traders can’t “invest money” in anyone or anything if they don’t know who they are buying from.”
Ripple CTO David Schwartz claims Judge Rakoff didn’t follow the Ripple decision because “it indirectly implicates them due to facts not applicable in this case.”
However, XRP price fell 3% in the past 24hrs in response to Judge Rakoff order in the Terra vs SEC lawsuit, with the price currently trading at $0.69.
Terra ecosystem tokens LUNA fell 5%, while LUNC and USTC dropped 2% and 7%, respectively. The prices have fallen below key support levels.
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