In the ongoing legal battle between Ripple and the US Securities and Exchange Commission (SEC), the regulator has filed an “interlocutory appeal” challenging Judge Analisa Torres’ ruling. This appeal has sparked a heated debate among legal experts, with some suggesting that it could indirectly challenge the status of Ripple’s digital asset XRP as a non-security.
The SEC’s appeal, outlined in their recent court filing, seeks to challenge the court’s holding that Ripple’s “programmatic” offers and sales of XRP to retail investors through exchanges did not involve the offer or sale of securities under the Howey test. This comes after Judge Torres ruled last month that Ripple’s direct sales of XRP to institutional investors violated securities law but its programmatic sales did not.
Legal experts have clashed over the intentions of the SEC in filing this appeal. Jeremy Hogan, a prominent lawyer in the XRP community, commented that the regulator is not challenging the ruling that XRP itself is not a security. However, retired securities lawyer Marc Fagel disagreed, stating that the SEC could be using the appeal to challenge the reasoning behind the ruling that XRP is not a security.
The debate continued, with Hogan highlighting that the judge’s reasoning on programmatic sales was separate from her dicta that XRP is not a security. Fagel did not respond to Hogan’s claim, leaving it unclear whether Hogan could convince him on this point.
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Another point of contention arose when a crypto influencer suggested that the Torres ruling on programmatic sales led to XRP being considered a non-security and allowed crypto exchanges to relist XRP. Hogan clarified that these were two separate issues, with XRP already deemed not to be a security, but if the SEC wins the appeal on sales, Ripple would be unable to use exchanges to facilitate sales.
The motives behind the SEC’s appeal remain unclear. Fagel suggested that the appeal could be driven by a desire for judicial clarity and to protect the SEC’s current initiatives. He acknowledged that the SEC is taking a substantial risk, as a ruling against them by the 2nd Circuit would be a significant blow.
The XRP community is eagerly awaiting the next steps in this legal saga. Ripple is expected to respond to the appeal by August 16, 2023, and the SEC has proposed filing an opening brief on August 18.
In regards to market reaction, the price of XRP did not appear to be significantly impacted by the SEC filing, with trading continuing at $0.6296 at the time of writing.
Overall, the SEC’s interlocutory appeal has sparked an intense debate among legal experts regarding its intentions and the potential implications for XRP’s status as a non-security. The outcome of this appeal and subsequent legal proceedings will have significant implications for Ripple and the wider cryptocurrency industry. The XRP community anxiously awaits further developments in this complex and closely watched case.
