Terraform Labs was looking to the positive verdict in the "SEC versus Ripple" litigation as a precedent for its own safeguard against allegations from the U.S. Securities and Exchange Commission. Yet, Judge Jed Rakoff has dashed such hopes.
The crux of the matter is a substantial divergence in the judge's view concerning the Howey Test, which assesses whether an asset is a security. Terraform Labs' token purchases were clearly carried out by users with profit expectations - a paramount criterion for securities. Therefore, it renders the precise method of purchase irrelevant.
The dichotomy between the two judges' decisions underscores the persisting uncertainty in the landscape of cryptocurrency regulations.
