The Ripple lawsuit saw Judge Analisa Torres making an observation regarding the SEC's application of the Howey test, suggesting that the Commission had veered off course. Stuart Alderoty highlighted Torres' point, emphasizing the issue of the SEC's broad use of the test in assessing cryptocurrency assets. Judge Torres, echoing a similar concern, pointed out that the SEC's approach did not align with cases where promoters made direct commitments to investors about a clearly defined enterprise.

Alderoty based his reflection on the recent Coinbase ruling. U.S. District Judge Katherine Polk Failla approved the SEC's lawsuit against Coinbase to proceed, with a partial triumph for the crypto exchange. Alderoty noted a section of the ruling that presented multiple unclear interpretations of what constitutes a crypto "ecosystem." He elaborated that according to the SEC, whenever a token is acquired, it signifies an investment in an unspecified "ecosystem," without regard to the token's origin, purpose, or location.

This discussion prompted Judge Torres' analysis in the Ripple-SEC lawsuit, where she realized that the SEC had strayed from the original Howey framework, where promoters interacted directly with investors regarding a distinct business venture.

The SEC recently filed a motion for remedies in the Ripple case, with upcoming significant dates to follow: April 22, Ripple's response to the SEC's request for $2 billion in penalties, and May 6, 2024.