Dennis Kelleher vs. Stuart Alderoty: Who Will Win the XRP Appeal?

Dennis Kelleher, Better Markets' President and CEO, expresses confidence in the SEC's likelihood of winning on appeal against Ripple.

Dennis Kelleher, Better Markets’ President and CEO, believes the SEC has a 90% chance of winning on appeal against Ripple. This is in response to claims made by Ripple CLO Stuart Alderoty regarding the possibility of the Second Circuit overturning Judge Torres’ decision.

Earlier this week, we reported that the Ripple CLO asserted that the Second Circuit will not overturn Judge Torres’ decision on XRP’s non-security status and secondary market trading of the coin. To provide some background, Judge Torres ruled that XRP in itself is not a security and that secondary market trading of XRP does not constitute investment contracts.

In a recent interview, Alderoty characterized the decision as the law of the land, noting that the SEC is unlikely to succeed at the appellate court. According to Alderoty, the Second Circuit rarely overturns lower courts’ decisions, with reversal rates occurring at less than 10%.

This suggests that Alderoty believes the SEC has a less than 10% chance of winning on appeal.

Kelleher, on the other hand, thinks the SEC stands a higher chance of winning on appeal against Ripple, placing the odds at 90%. The Better Markets CEO criticized the Ripple judge for turning 90 years of law upside down when “he” ruled that securities laws should protect only sophisticated investors, with no protection for unsophisticated investors.

Kelleher pointed out that other judges have rejected the Ripple judge’s decision, indicating that it was incorrect. Notably, Kelleher’s criticism centers on the Judge Torres summary judgment, which found that Ripple violated federal securities laws via its institutional sales of XRP. In contrast, the judge ruled that Ripple’s programmatic sales and other distributions of XRP do not constitute investment contracts.

Critics like Kelleher believe Judge Torres indirectly protected sophisticated investors or institutional clients while leaving retail investors unprotected through her decision.

XRP Enthusiasts React

In the meantime, Kelleher’s recent claim triggered reactions within the XRP community. Reacting to Kelleher’s statement, CryptoLaw corrected three (3) misconceptions in his comment.

First, the media outlet clarified that the court ruling declared that XRP in itself is not a security. However, the ruling held that the way the token is packaged or sold might be an investment contract. According to CryptoLaw, any contrary argument to this decision is ”upside-down” reasoning.

Second, CryptoLaw mentioned that the SEC acknowledged in court that it would not appeal the decision regarding its failed argument that XRP is a security. Lastly, it pointed out that the Ripple judge is not a “he,” as Kelleher noted in his previous tweet.

Moreover, Attorney Bill Morgan challenged Kelleher’s assertion that other judges have rejected Judge Torres’ decision. According to him, the ruling judge of the Binance lawsuit, Judge Amy Berman Jackson, already agreed with Judge Torres’ distinction between programmatic retail buyers and institutional investors, unlike Judge Jed Rakoff, who did not follow the reasoning in the TerraForm Labs’ lawsuit. He added that two judges already support the distinction between retail and institutional buyers. Hence, he speculated that the SEC has a 9% chance of winning on appeal, rather than Kelleher’s 90% projection.

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