US Congressman Ritchie Torres calls out SEC Chair Gary Gensler over crypto assault, cites Ripple's victory

US Congressman Ritchie Torres has urged the SEC and chair to stop its unwarranted attack on crypto.
The Congressman cited recent win by Ripple Labs, asking Gensler to come to terms with the clarity achieved in the ruling.
Torres wants the commission to focus on bad actors perpetrating serious transgressions such as fraud and market manipulation.

US Congressman Ritchie Torres has written a letter to the honorable Securities and Exchange Commission (SEC) chair. In the letter, the politician inquires whether the agency will heed the recent ruling in the Ripple Labs vs. SEC case and abandon its campaign against cryptocurrencies.

Also Read: XRP surpasses Bitcoin as the most traded asset in South Korea following partial win against SEC.

US Congressman Ritchie Torres wants Gensler to back off crypto

US Congressman Torres has asked SEC Chair Gary Gensler to comply with the recent court determination by Judge Analisa Torres, who ruled that XRP is not a security unless when sold to institutional investors.

Congressman Torres calls out the commission for indiscriminately targeting cryptocurrencies, lauding Judge Analisa Torres for finally drawing a line between securities and commodities. Calling it the "Torres Doctrine" as a tribute to the judge, the Congressman articulates that the SEC "lacks the legal authority to regulate digital assets untethered from an actual security offering."

Judge Analisa Torres’s decision in the Ripple case establishes what I call the Torres Doctrine, rejecting @SECGov Chair Gary Genler’s indiscriminate assault on crypto.

Digital assets aren’t securities in themselves but can be part of investment contracts, which are securities. https://t.co/KkyElR4f6Z
— Rep. Ritchie Torres (@RepRitchie) July 18, 2023

Further, the Congressman notes that the "Torres Doctrine's persuasive authority would prove weighty in future legal cases, which therefore positions it as an impediment in the commission's ability to make up any crypto laws regarding securities. Evidence of this fact is seen in the agency's legal tussle against Coinbase exchange, with the legal basis of this case currently under question.

US Congressman Torres among pro-crypto camp

Congressman Torres adds to the list of US politicians who are cryptocurrency proponents. Others include Minnesota Representative Tom Emmer, Arkansas Representative French Hill, Texas Rep Ted Cruz, Ohio Rep J.D. Vance, Ro Khanna of California, New York's Kirsten Gillibrand, North Carolina's Patrick McHenry, and Wyoming's Cynthia Lummis.

Following Ripple's partial win on July 14, House Majority Whip Tom Emmer was among those who congratulated Ripple Labs, calling the outcome a "monumental development" and suggesting that it passes as law.

The Ripple case is a monumental development in establishing that a token is separate and distinct from an investment contract it may or may not be part of. Now, let’s make it law. pic.twitter.com/FZtO1BzfWX
— Tom Emmer (@GOPMajorityWhip) July 13, 2023

Referring to the SEC's infamous regulation by enforcement, Congressman Torres presents as an opposing force against US Senator Elizabeth Warren, who has expressed her position advocating for tighter crypto rules. Referring to crypto as a national security threat during a May 4 hearing, the Senator proposed cryptocurrency regulation, saying:

…Senator Roger Marshall and I will soon reintroduce our bill to crack down on illicit crypto activity. Our bill is not about SEC regulation or cracking down on crypto investor scams, although I think we need to do that. Our bill concerns law enforcement, national security, and keeping our country safe.

The Senator recently imposed upon the SEC to investigate Elon Musk over Tesla and its association with the giant social media platform Twitter. Meanwhle, crypto markets continue to observe the direction the Ripple Labs vs SEC lawsuit will take.

SEC vs Ripple lawsuit FAQs

Is XRP a security?

It depends on the transaction, according to a court ruling released on July 14:

For institutional investors or over-the-counter sales, XRP is a security.
For retail investors who bought the token via programmatic sales on exchanges, on-demand liquidity services and other platforms, XRP is not a security.

How does the ruling affect Ripple in its legal battle against the SEC?

The United States Securities & Exchange Commission (SEC) accused Ripple and its executives of raising more than $1.3 billion through an unregistered asset offering of the XRP token.

While the judge ruled that programmatic sales aren’t considered securities, sales of XRP tokens to institutional investors are indeed investment contracts. In this last case, Ripple did breach the US securities law and will need to keep litigating over the around $729 million it received under written contracts.

What are the implications of the ruling for the overall crypto industry?

The ruling offers a partial win for both Ripple and the SEC, depending on what one looks at.

Ripple gets a big win over the fact that programmatic sales aren’t considered securities, and this could bode well for the broader crypto sector as most of the assets eyed by the SEC’s crackdown are handled by decentralized entities that sold their tokens mostly to retail investors via exchange platforms, experts say.

Still, the ruling doesn’t help much to answer the key question of what makes a digital asset a security, so it isn’t clear yet if this lawsuit will set precedent for other open cases that affect dozens of digital assets. Topics such as which is the right degree of decentralization to avoid the “security” label or where to draw the line between institutional and programmatic sales are likely to persist.

Is the SEC stance toward crypto assets likely to change after the ruling?

The SEC has stepped up its enforcement actions toward the blockchain and digital assets industry, filing charges against platforms such as Coinbase or Binance for allegedly violating the US Securities law. The SEC claims that the majority of crypto assets are securities and thus subject to strict regulation.

While defendants can use parts of Ripple’s ruling in their favor, the SEC can also find reasons in it to keep its current strategy of regulation by enforcement.

Can the court ruling be overturned?

The court decision is a partial summary judgment. The ruling can be appealed once a final judgment is issued or if the judge allows it before then. The case is in a pretrial phase, in which both Ripple and the SEC still have the chance to settle.

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