 to certify an interlocutory appeal.){kind=link}
- SEC moves to appeal regarding the sales of XRP.
- In mid-July, 2023, a federal judge partially ruled that XRP is not a security.
The SEC has decided to appeal the Ripple ruling which deemed the XRP token as not a security, and petitioned an interlocutory appeal—after the partial ruling that XRP is not a security, the SEC had until August 18 to officially file a motion while Ripple had to respond by September 1st, 2023.
SEC Moves to Appeal Ripple Ruling
The financial watchdog of the United States, the Securities and Exchange Commission (SEC), asked permission to appeal a federal ruling on August 19, 2023, arguing that the sale of XRP through exchanges does not violate securities law. On August 19, the Judge agreed to listen to the SEC’s argument.
In a petition, the SEC asked Judge Analisa Torres of the United States District Court for the Southern District of New York (SDNY) to certify an interlocutory appeal. It’s an appeal made before the conclusion of a case. The federal regulator wishes to specifically appeal the Judge’s ruling which states XRP is not a security.
SEC is saying that Ripple’s programmatic sale of XRP does not violate securities law because the retail investors bought the asset on an exchange. Also, they might not have had similar expectations as an institutional investor purchasing XRP directly from Ripple.
The ruling, whatever it may be, could impact other SEC cases, says the regulator. The other cases are against Coinbase and Dragonchain, among others, and bankruptcies. In the filing, the agency points explicitly to the sales of XRP and not the asset itself.
“The SEC did not argue here or in Terraform that the asset underlying those investment contracts were necessarily a security.” Also, the agency does not seek any appellate review of any holdings related to the fact that the underlying asset here, XRP, is nothing but a computer code with no inherent value.
Experts in the past have said many times that the SEC vs. Ripple case could have severe implications for the crypto industry.
The War Continues
On August 17, 2023, a federal judge allowed the Securities and Exchange Commission (SEC) to appeal against her ruling. She said Ripple did not violate any securities law, making XRP available to retail traders and exchanges to relist token.
If the financial watchdog wins this time, it can ask the appeals court for permission to file an actual appeal of the ruling. Stuart Alderoty, Ripple’s Chief Legal Officer, previously stated that the company does not adhere to SEC’s request. At the time, he assumed no extraordinary circumstances would justify departing from the rule and the Judge might not allow the agency to appeal.
Founder and managing partner of the Rodman Law Group, Dave Rodman says that the appeal process should continue for the rest of the case. However, suppose the Securities and Exchange Commission wins the approval to file from both Judge Torres and the Second Circuit Court of Appeals, in that case, the circuit court might stay the proceedings until the filed appeal’s resolution.
The SEC vs. Ripple case start in December 2020, where the regulator claim that the token XRP is a security. Both parties fought the case with solid arguments. And in mid-July 2023, the federal court pass a partial ruling that XRP is not a security. The market rejoiced and never expected the agency to appeal. But now, as the agency decided to appeal, the war shall go on for some more time.
Dr. Naveen Singh is an entrepreneur with achievements in sports, academics, healthcare, innovation, blockchain technology, telecommunications, and philanthropy. He is the Co-Founder and Chief Executive Officer (CEO) of Inery, the first layer-1 blockchain programmed for database management. With Inery, he aligns with his vision of a new paradigm for data to empower web3 and complete decentralization.