The U.S. Securities and Exchange Commission (SEC) has expressed its intention to potentially appeal the groundbreaking ruling in the lawsuit against Ripple, marking a significant victory for the crypto company and setting a crucial precedent regarding the classification of cryptocurrencies as securities.

The SEC’s disclosure of its appeal consideration surfaced in the latest filing for a separate lawsuit involving Do Kwon and the now-defunct Terraform Labs.

Last week, Federal Judge Analisa Torres issued a summary judgment motion, categorizing XRP’s institutional sales as securities offerings, while ruling that retail or programmatic sales of XRP did not fall under the scope of an investment contract.

This ruling was cited by legal representatives defending Do Kwon, the disgraced founder of Terraform Labs, in their motion to dismiss the SEC’s lawsuit against him and his firm.

Bloomberg reported that the SEC urged the presiding judge in the lawsuit against Kwon and Terraform Labs not to consider the Ripple ruling as binding legal precedent.

The SEC’s argument was centered on the notion that Judge Torres’ differentiation between the expectations of sophisticated institutional investors and retail investors regarding XRP’s programmatic sales created an “artificial distinction.”

Additionally, the SEC contended that the Ripple ruling introduced unwarranted requirements to the well-established Howey Test, which serves as a basis for determining an asset’s status as a security.

The SEC argued that institutional buyers in this case, including trading firms that acquired Defendants’ crypto assets without resale restrictions, made these purchases based on the belief that the assets represented investment opportunities in Terraform’s endeavors.

Requesting the judge handling Do Kwon’s case to reject the components of the Ripple ruling related to XRP’s non-security classification for retail sales, the SEC also indicated its contemplation of appealing Judge Torres’ controversial ruling.

Interestingly, the securities regulator encouraged the Terraform judge to consider Judge Torres’ stance on institutional sales of XRP, which were deemed securities in the Ripple case.