Ripple Under Fire as SEC granted Chance to Appeal
SEC Vs. Ripple battle goes on | Credit: Shutterstock
- Judge Analisa Torres has allowed the SEC to file an interlocutory appeal in its case against Ripple
- The decision follows Ripple’s objection to a potential appeal in the case
- Approximately $23 million worth of XRP long positions were liquidated
The United States Securities and Exchange Commission (SEC) has been given permission to apply for leave to file an interlocutory appeal in its lawsuit against Ripple Labs, according to Judge Analisa Torres. On August 9, the securities regulator wrote to Torres to let her know that her choice might impact several ongoing legal proceedings.
Following American law, an interlocutory appeal occurs when a trial court’s decision is challenged while other parts of the case are still in progress. According to the ruling, the SEC has until August 18 to submit a motion requesting authorization to launch a lawsuit with the U.S. Court of Appeals for the Second Circuit. In opposition to the motion, Ripple may also submit a document.
Key Developments and Arguments in Ripple Labs’ Legal Battle
Only a few hours after Ripple Labs expressed opposition to a potential appeal in the matter, the decision was made. Three key arguments were presented by Ripple’s legal team to refute the SEC’s demand.
On July 13, Torres issued a decision stating that the native XRP cryptocurrency of Ripple is not a security when sold to the general public, but it is a security when sold to institutions.
Since the SEC sued Ripple and its two senior executives, Brad Garlinghouse and Chris Larsen, in December 2020 over claims the business was marketing an unregistered securities, the case against Ripple has been ongoing.
Garlinghouse recently discussed his opinion that the SEC would go through a protracted appeals process.
“As a matter of law, XRP is not currently a security, according to the law of the state. Frankly, we are pretty optimistic until there is a chance for the SEC to appeal, which would take years,” he then stated. Garlinghouse asserted that a challenge to the retail sales decision would further strengthen Torres’ choice.
First, they contended that an appeal requires a purely legal issue to be raised and that the SEC’s request does not do so. Additionally, they contended that the SEC’s assertion of an improper court decision is insufficient and that a prompt appeal will not progress the termination lawsuit procedures.
Ripple spokesperson reiterated CCN Garlinghouse’s Twitter statement as well as the statement from Ripple CLO Stu Alderoty, who said:
“We oppose the SEC’s request for an interlocutory appeal. There is no extraordinary circumstance here that would justify departing from the rule requiring all issues as to all parties to be resolved before an appeal.”
The SEC intends to challenge Torres’ ruling that institutional XRP sales, or sales to investors like venture capital firms, are authorized securities offerings, but secondary XRP sales are not.
Legal experts saw the judge’s ruling as a setback for the federal agency, which is currently engaged in a wider campaign of repression against the cryptocurrency market in the wake of the failure of the now-bankrupt exchange FTX.
The most recent ruling by Torres in the SEC’s lawsuit against Ripple is the latest in a historic case that might impact how cryptocurrency is regulated in the United States.
Ripple Price Response for Ripple
The price of Ripple has ramped up, covering all the territory gained during the rise on July 13. XRP is down 30% in the past day and 14% in the last hour. A new low for the Relative Strength Index (RSI) has been reached.
In less than an hour following this announcement, about $23 million worth of long XRP positions were liquidated from the cryptocurrency market.
History of Ripple Vs. SEC case
When the SEC filed a lawsuit against Ripple, the agency’s accusations were focused on XRP being an unregistered security or being comparable to stock in a public firm. On the other hand, Ripple claimed that it was a commodity, or something more equivalent to gold or sugar.
The matter has been making its way through court for more than two years. In the meantime, the SEC has stepped up its legal action against cryptocurrency companies, filing landmark lawsuits against some of the biggest names in the sector, including Binance and Coinbase, based on the same legal theory that supports its case against Ripple—that the vast majority of cryptocurrencies are securities.
But Torres eventually issued a summary judgment in the matter in July. The CEO of Ripple, Brad Garlinghouse, then stated that the decision “directly undercuts the SEC’s claims that nearly all tokens are inherently securities—likely to set a positive precedent for other digital tokens in the U.S.”
The SEC has stated that its protracted legal dispute with Ripple won’t end any time soon, though, and that it intends to appeal.
