Judge Jed Rakoff said the court rejects the approach recently adopted by another judge in the same District who ruled on SEC v. Ripple Labs.

A federal judge ruled that the U.S. Securities and Exchange Commission (SEC) had made factual assertions in its claim that Terraform Labs’ crypto assets qualify as securities, in an order that denied a motion to dismiss the case.

The order, filed by the U.S. District Judge Jed Rakoff on Monday, also rejected a decision made by Analisa Torres, another judge in the SEC’s case against XRP-issuer Ripple Labs, which deemed that XRP sold to retail investors on exchanges did not qualify as securities.

Many in the crypto community considered the ruling on XRP as far more than a partial legal victory for the firm behind the cryptocurrency. Some industry watchers believe that the ruling set a precedent that could be instrumental in moving crypto regulation to more favorable territory within the U.S.

However, Judge Rakoff detailed a different interpretation of the Howey Test and declined to draw a distinction between the manner of token sales, whether they are sold to institutional investors or to retail through the secondary market. 

“In doing so, the Court rejects the approach recently adopted by another judge of this District in a similar case, SEC v. Ripple Labs Inc,” said Judge Rakoff in the order. 

Torres’ ruling was in view of the fact that retail investors could not have known they were purchasing XRP from Ripple through programmatic sales on exchanges. 

“Whatever expectation of profit they had could not, according to that court, be ascribed to defendants’ efforts,” wrote Rakoff. 

“But Howey makes no such distinction between purchasers. And it makes good sense that it did not. That a purchaser bought the coins directly from the defendants or, instead, in a secondary resale transaction has no impact on whether a reasonable individual would objectively view the defendants’ actions and statements as evincing a promise of profits based on their efforts.”