Ripple Labs, the company behind the XRP token, has expressed its disagreement with the United States Securities and Exchange Commission’s (SEC) request for an interlocutory appeal. The appeal pertains to the summary judgment issued by U.S. District Court Judge Analisa Torres on July 13. In a letter to Torres on August 16, Ripple’s lawyers argued that the SEC failed to satisfy certain elements of the Howey test regarding the distribution of XRP, making it a “legal question” that should be rejected by the court.
An interlocutory appeal is when a trial court ruling is appealed while other aspects of the case are still ongoing. Ripple’s legal team believes that it would be more appropriate for the SEC to appeal the court’s ruling after a final judgment with a full record. The lawyers presented three main arguments against the SEC’s request: firstly, they argued that the appeal requires a pure question of law, which the SEC’s request does not raise any new legal issues; secondly, they claimed that the SEC’s argument that the court ruled incorrectly is insufficient, as the SEC must demonstrate a clear conflict between two courts on the subject issues, which is not the case here; and thirdly, the lawyers asserted that an immediate appeal would not advance the termination litigation proceedings.
Stuart Alderoty, Ripple’s chief legal officer, commented on the matter, stating that there are no extraordinary circumstances that would warrant the court to deviate from normal legal procedure: “There is no extraordinary circumstance here that would justify departing from the rule requiring all issues as to all parties to be resolved before an appeal.”
In July, Ripple achieved a partial victory in its ongoing legal battle with the SEC regarding the securities status of XRP. Judge Analisa Torres ruled that the XRP token itself is not a security. However, she noted that sales of XRP tokens can be deemed securities under certain circumstances, such as when sold to institutional investors but not when sold on exchanges to retail traders.
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The outcome of the case is closely watched by the crypto industry, as it could set a precedent for the regulation of digital assets in the United States. The Howey test, which determines whether a particular transaction involves an investment contract and falls under the SEC’s jurisdiction, is a crucial factor in assessing the regulatory status of cryptocurrencies. Ripple’s argument that the SEC failed to satisfy the elements of the Howey test in its case could have significant implications for the classification of XRP and other digital assets.
It remains to be seen how the court will respond to Ripple’s opposition to the SEC’s interlocutory appeal. The case has garnered widespread attention due to its potential impact on the cryptocurrency market and the regulatory landscape surrounding digital assets. The outcome of this legal battle could shape the future of the industry and provide more clarity on the SEC’s jurisdiction over cryptocurrencies. As the case continues to unfold, industry participants and investors await further developments that could shape the future of Ripple and the broader crypto market.
