A Contested Appeal
The U.S. Securities and Exchange Commission (SEC) has recently intensified its argument for a mid-case appeal regarding specific legal aspects of Ripple’s dealings. Central to the dispute is whether Ripple’s action of making XRP available to retail investors via crypto exchanges contravened securities laws—a matter the SEC firmly believes needs intervention from an appeals court. This contention was in direct response to Ripple’s memo, which had stated the SEC’s grounds for an appeal were insufficient.
Understanding the Case’s Background
Last month, the SEC expressed its desire to appeal a ruling by Judge Analisa Torres of the U.S. District Court for the Southern District of New York. Judge Torres had determined that while Ripple’s sales of XRP to institutional investors breached federal securities law, the same did not hold true for sales to retail investors. Interestingly, another verdict from Judge Jed Rakoff, a colleague of Judge Torres in the same court, contradicted this ruling in a separate case presented by the SEC. The SEC has highlighted this discrepancy as a core argument to persuade Judge Torres to approve the interlocutory appeal. This would permit an appellate court to address specific legal queries even as the original case continues.
SEC’s Stance on Efficiency
Countering Ripple’s claims, the SEC underscored its alignment with the Court in seeking an efficient conclusion to the litigation. The agency emphasized its goal to avoid multiple trials and extend the process unnecessarily. The SEC’s assertion is that Ripple aims to defer the ultimate decision to continue profiting from XRP sales without mandated disclosures. Since 2020, these sales have reportedly netted over $3 billion.
Judge Torres’ Initial Ruling
Judge Analisa Torres had previously ruled that Ripple’s programmatic sales of XRP did not breach securities regulations due to an existing blind bid procedure. However, she also concluded that direct token sales to institutional stakeholders were indeed securities. This rendered a partial victory to the SEC. Now, the SEC is intent on appealing not only the decision concerning programmatic sales but also other transactions involving XRP in exchange for goods and services.
Ripple’s Rebuttal
Ripple countered by suggesting that the court should rebuff the SEC’s appeal application. They maintained that the court’s summary decision doesn’t necessitate an interlocutory appeal. Ripple warned that granting the SEC’s appeal might open doors for the agency to also challenge the court’s order related to institutional XRP sales. Such a move would require a thorough review, not just the segments the SEC chooses to spotlight.
Conclusion
The tug of war between the SEC and Ripple underscores the broader challenges of regulating the rapidly-evolving cryptocurrency industry. With both parties presenting robust arguments, the decision on the interlocutory appeal will be keenly awaited by stakeholders and could set a precedent for future crypto-related litigations.
