The United States Securities and Exchange Commission (SEC) is taking steps to appeal a court decision from July in its lawsuit against Ripple Labs. The court ruled that the sale of XRP, a digital asset created by Ripple, is not a security when sold to retail investors. In an August 9 letter to Judge Analisa Torres, who is presiding over the case, the SEC expressed its belief that her decision should be reviewed by an appellate court.
The SEC has requested that the case be put on hold during the appeal process, stating that the outcome of the appeal could affect other pending court cases involving alleged securities violations by crypto firms such as Binance and Coinbase. The SEC is currently engaged in legal battles with these firms and others in the crypto industry.
In its letter, the SEC argued that an interlocutory review is necessary in this case. It stated that there are two key issues that need to be reviewed: whether Ripple’s programmatic XRP offers and sales on crypto exchanges and individual sales were securities. The SEC believes that these issues involve important questions of law that have already sparked differences of opinion within the district.
The SEC also emphasized the judge’s decision in a separate suit against Terraform Labs. In that case, the judge rejected Torres’ ruling and stated that cryptocurrencies sold on exchanges could also be considered securities. This further supports the SEC’s argument that the appellate court should review the ruling in the Ripple case.
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This development comes nearly a month after Ripple achieved a partial victory over the SEC regarding the securities status of XRP. Judge Torres ruled that while the XRP token itself is not a security, sales of XRP tokens can be classified as securities under certain circumstances. For example, if they are sold to institutional investors, but not when sold on exchanges to retail traders.
The SEC’s decision to appeal the ruling is controversial and has been met with criticism. Attorney Jeremy Hogan, commenting on Twitter, described it as a “questionable decision.” He pointed out that the SEC is not appealing the ruling on whether XRP itself is a security but is instead focusing on the programmatic and individual sales issues.
It is worth noting that the SEC’s appeal comes at a time when the debate around the regulatory status of cryptocurrencies is intensifying. CoinGecko, for example, has recently introduced an index for crypto tokens that are alleged to be securities. This highlights the growing interest and concern surrounding the classification of digital assets and the need for clear regulatory guidelines.
In conclusion, the SEC’s decision to appeal the court ruling in the Ripple case demonstrates its determination to establish regulatory clarity and oversight in the crypto industry. The outcome of this appeal will have significant implications not only for Ripple but also for other crypto firms and the wider crypto market. As the battle between regulators and the crypto industry continues, it remains to be seen how these legal disputes will ultimately shape the future of digital asset regulation.
