In the ongoing legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC), the crypto community has been eagerly anticipating the SEC’s next move. James Murphy, a pro-crypto lawyer, has outlined four potential options the SEC may consider in response to Ripple’s partial legal victory.
The first option involves the SEC filing a request for interlocutory appeal. Since no final judgment has been entered yet, the SEC does not have the unilateral right to appeal. Instead, it would need permission from both Judge Torres and the 2nd Circuit Court of Appeals to proceed with an interlocutory appeal. To obtain permission, the SEC must show that the ruling involves a controlling question of law, that there are substantial grounds for a difference of opinion, and that an immediate appeal may materially advance the litigation.
The second option involves the SEC going through with a trial on the aiding and abetting claim against Larsen and Brad Garlinghouse, Ripple’s CEO, and then filing a regular appeal. This would involve a lengthier legal process and could potentially delay the resolution of the case.
The third option is for the SEC to drop the claim against Larsen and Garlinghouse now and take an immediate appeal, for which no permission would be needed. This could be seen as a strategic move by the SEC to focus on its main claims against Ripple.
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The final option is for the SEC to settle with Ripple. However, Murphy believes that the SEC is unlikely to settle, as it would leave Judge Torres’ precedent untested on appeal. The SEC’s “regulation-by-enforcement” program against the crypto industry hinges on reversing Torres’ decision, so it is expected that the SEC will request an interlocutory appeal within the next two weeks.
Obtaining permission for an interlocutory appeal can be time-consuming and potentially delay the overall timeline of the case. However, there is tremendous political pressure on SEC Chair Gary Gensler to get Judge Torres’ decision reversed as soon as possible. The decision’s impact on the SEC’s cases against other crypto exchanges, such as Coinbase, Binance, and Bittrex, also adds to the urgency to take swift action.
The political considerations are important, as crypto exchanges around the world are relisting XRP, making the SEC look bad and emboldening progressive Congressman Ritchie Torres and others to ramp up criticism of Gensler. This puts further pressure on the SEC to act decisively and assert its authority over the crypto industry.
While a settlement between the SEC and Ripple is unlikely at this stage, it is essential to note that the appeals process could still be time-consuming. However, Murphy believes that it would be in the best interests of Ripple and the XRP community for the appeals process to start now rather than a year from now. He also likes Ripple’s chances on appeal, suggesting that the legal battle is far from over.
As the legal battle between Ripple and the SEC continues, the crypto community will eagerly watch how events unfold and the SEC’s next move. The outcome of this case will not only impact Ripple but also have broader implications for the crypto industry and how it is regulated by the SEC. The decision on whether to pursue an interlocutory appeal will set the tone for the future of cryptocurrency regulation in the United States.
