Following Judge Analisa Torres’s ruling that programmatic XRP sales did not qualify as securities, the SEC filed an interlocutory appeal with the court. This meant that the US Securities and Exchange Commission (SEC) did not agree with the ruling, and while the interlocutory appeal has been approved by the court, pro-XRP lawyer John Deaton has called the move laughable as he dismantles the SEC’s appeal.
In a post titled ‘The Irony of Interlocutory Appeal’, Deaton shared his thoughts on the SEC’s interlocutory appeal. The post which was published on Thursday, September 28, on the Crypto Law website explains how the appeal filing may end up being in favor of Ripple.
The pro-XRP lawyer explains that Judge Torres granting the motion for appeal was expected and the reasoning was that such an appeal would grant the Judge an opportunity to clarify her reasoning for ruling in favor of Ripple.
According to Deaton, Judge Torres will be able to address statements that have been made by Judge Rakoff, the judge in charge of the SEC vs. Terraforms Labs lawsuit, regarding her ruling. “With the right to file a formal motion for an interlocutory appeal granted, Judge Torres can now distinguish between her actual ruling in the Ripple case, versus what Judge Rakoff purported it to be,” Deaton explained.
Furthermore, the pro-XRP lawyer said, “It was the SEC who categorized the different sales, not Judge Torres.” This means that Judge Torres actually ruled on what the SEC had presented before her and not something that wasn’t part of the case.
The post by Deaton also touches on what would happen if either Ripple or the SEC were to emerge victorious on the interlocutory filing. On one hand, the SEC winning would mean that the case lands before Judge Torres once again, and she would have to analyze the facts of the case using the Howey test. However, Deaton strongly believes that the regulator would not win the appeal.
“even if the 2nd Circuit disagrees with Judge Torres’ analysis of Howey’s third prong, the SEC does not win at summary judgment,” Deaton explains. “Instead, Judge Torres would then apply the investment prong and the common enterprise prong of the Howey test, again, further prolonging the case.”
On the other hand, if Ripple were to emerge victorious, then the case would still find its way back to Judge Torres, but this time around, it would be headed for trial. Following the outcomes, Deaton predicts more appeals on all the issues addressed. In the end, it just results in a prolonged and drawn-out fight.
As Deaton mentioned in the post, even if an early appeal were to be granted in the case, it would still draw out the legal battle for another 1.5 to 2 years. This could suggest that the Ripple vs. SEC case could continue into 2025.
Overall, the interlocutory appeal filed by the SEC has raised eyebrows and caused skepticism among pro-XRP individuals like John Deaton. It is clear that he believes the appeal may end up working in Ripple’s favor, as Judge Torres will have the opportunity to clarify her ruling and address misconceptions made by other judges. Regardless of the outcome, it seems likely that the Ripple vs. SEC case will continue to be a lengthy and complex legal battle.