The U.S. Securities and Exchange Commission (SEC) is seeking to appeal Judge Analisa Torres’ ruling in July that the programmatic sale of Ripple’s XRP cryptocurrency did not qualify as sales of financial securities. The regulator argued that the ruling could have gone the other way, given differing opinions on its legal basis.
The SEC filed a court motion requesting that Judge Torres allow the federal appeals court to review her decision. The SEC stated in the filing that the case involves “controlling questions of law on which there is substantial ground for differences of opinion, as reflected by an intra-district split that has already developed.”
This move by the SEC comes after Ripple recently achieved a partial victory in its lawsuit with the SEC. The initial accusation by the regulator was that Ripple had offered XRP as an unregistered security in December 2020. However, Judge Torres ruled in July that while Ripple’s XRP sales to institutional investors violated securities laws, sales on public exchanges to retail investors did not.
The SEC argued that this ruling is a matter of opinion and referenced another ongoing lawsuit between itself and Terraform Labs. In that case, the SEC accused the blockchain developer of alleged crypto securities fraud. On July 31, ruling Judge Jed Rakoff rejected Terraform’s motion to dismiss the case and expressed disagreement with Judge Torres’ decision on the Ripple ruling.
Related Post
It’s important to note that the lawsuit between the SEC and Ripple is still ongoing. A jury trial is scheduled for the second quarter of 2024. Ripple Labs Chief Legal Officer Stuart Alderoty clarified that the SEC does not currently have the right to appeal and is seeking permission to file an interlocutory appeal.
Interlocutory appeals are appeals that occur before all claims are resolved in relation to all parties involved. They are only allowed under specific circumstances. The SEC believes that a timely review of the court decision in the Ripple case is necessary due to the potential impact on other pending actions.
In addition to the case against Ripple, the SEC has filed lawsuits against various other cryptocurrency exchanges, including Binance and Coinbase, for alleged securities violations. Just recently, U.S.-based crypto exchange Bittrex, which was sued by the SEC in April for allegedly operating as an unregistered securities exchange, agreed to settle the charges by paying a fine of $24 million.
The SEC’s actions reflect its continued efforts to regulate the cryptocurrency industry and enforce securities laws. The outcome of the Ripple case will undoubtedly have significant implications for the future regulation of cryptocurrencies in the United States.
Overall, the appeal by the SEC in the Ripple case demonstrates the complexity and ongoing legal debates surrounding the classification of cryptocurrencies as securities. As the case progresses, the cryptocurrency industry and market participants will be closely monitoring the developments and their potential impact on the regulatory landscape.
