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Crypto Lawyer Outlines Four Possible Outcomes for Ripple vs. SEC

Published July 26, 2023 2:14 PM
Omar Elorfaly
Published July 26, 2023 2:14 PM

Key Takeaways

  • The SEC has a small window to file its appeal
  • XRP is making the SEC look bad
  • An SEC appeal could be a double-edged sword for the regulating body

The entire crypto industry has been barely discussing anything but XRP’s triumph over the US Securities and Exchange Commission. While the SEC does have the opportunity to file an appeal, more than one crypto legal expert does not see such an appeal as a threat to Ripple or the crypto industry.

One crypto legal expert broke down the four possibilities for the SEC to motion for such an appeal.

The Likely Option

James Murphy, also known as MetaLawMan, a crypto legal expert, first explores  the potential for the SEC to file a request for interlocutory appeal.

Murphy claims that “Because no final judgment has been entered yet, the SEC doesn’t have the unilateral right to appeal now, also that “It would need permission from both Judge Torres & the 2nd Circuit Court of Appeals to proceed with an interlocutory appeal.”

According to MetaLawMan, the SEC would have to fulfill three qualifications in order to get permission for an interlocutory appeal:

“1.  The ruling involves a controlling question of law;

  1. There is substantial grounds for difference of opinion on that question; and
  2. An immediate appeal may materially advance the litigation.”

However, Murphy does agree that the SEC would have no problem fulfilling said requirements. The SEC, according to Murphy, would have on average about 30 days to submit the request. 

If it’s accepted, the SEC would then have Ten days to ask the 2nd circuit.

Murphy sees this approach as the one most favorable for the SEC. His reasons cited are mostly regarding the pressure the SEC is now under from adjacent governmental bodies, as well as from private companies facing SEC litigation, such as Coinbase.

The Unlikely Options

Settling is extremely unlikely. First of all, SEC’s Chair Gary Gensler is unlikely to accept defeat. Second, if the SEC settles, that would mean Judge Torres’ ruling is here to stay, which would definitely pose an issue for the SEC in trials against Coinbase and Binance.

Other options include relying on the ‘aiding & abetting’ allegations against Ripple CEO Brad Garlinghouse and co. The SEC then would have the option to file for a regular appeal

Moreover, the SEC could choose to drop the aforementioned claim and go for an immediate appeal that would require no permission.

The SEC Might Be In For A Lose-Lose

On Sunday, John Deaton, a well-renowned crypto legal expert, essentially dismissed the threat of the SEC filing for an appeal. 

According to Deaton, “An appeal is not even close to be a setback. First, it will be two years from now before a decision is issued by the 2nd Circuit, if it’s appealed. The Torres Decision is the law until then – at least in the 2nd Circuit.“

“Second, even if the 2nd Circuit said Torres was wrong regarding her application of the 3rd Howey factor (which I predict they won’t), that doesn’t meant the SEC wins on Programmatic sales (sales on exchanges).”

Deaton is not dismissing the fact that the SEC would potentially seek out a different judge who would overturn Judge Torres’ ruling. But he thinks that “a fellow judge in the 2nd Circuit is going to be hard pressed to disagree with Judge Torres, especially considering she cited Judge Castel from Telegram.”


The SEC is probably not going to let go of the XRP so easily considering the implications it would have on Gensler and other cases with Coinbase and Binance.

Ripple’s chief legal officer Stuart Alderoty, however, points out that the SEC could be risking losing all future cases if it continues to pursue the XRP case.

“We think the judge got that right, and we think that was a faithful application of the law, and I think a court of appeals will not only affirm that but maybe even amplify that to even a greater extent,” said Alderoty.

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