Ripple Pushes Back Against SEC’s Appeal Request

Jimmy Aki
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Ripple Labs has contested the U.S. Securities and Exchange Commission’s (SEC) bid for an interlocutory appeal following Judge Analisa Torres’ ruling on the classification of XRP as securities for sale.

Ripple Opposes SEC Appeal

In a recent development, Ripple Labs has vehemently opposed the SEC’s recent request for an interlocutory appeal.

An interlocutory appeal occurs when a decision made by a trial court is challenged while other elements of the case are still ongoing. Also, such appeals are permitted only under particular conditions.

On August 16, a letter from Ripple’s legal representatives was addressed to Judge Torres from the Southern District of New York.

This letter detailed that due to the SEC’s failure to meet specific aspects of the Howey test concerning the distribution of XRP by Ripple – deemed a ‘legal question’ – it is their stance that the court should dismiss its motion seeking permission to submit an interlocutory appeal.

Ripple’s legal team presented three primary counterarguments against the SEC’s petition. Firstly, they contended that an appeal necessitates a purely legal question, and the SEC’s request does not introduce any novel legal matters warranting review.

Secondly, the attorneys asserted that the SEC’s assertion that the court made an erroneous judgment on the issue falls short. This is because the SEC must demonstrate a clear conflict between two courts regarding the specific matters at hand, a circumstance that does not apply.

Thirdly, Ripple’s legal representatives argued that an immediate appeal would not expedite the conclusion of the ongoing litigation proceedings.

In response to Ripple’s opposition, Brad Garlinghouse, the company’s CEO, clarified that even if the appeal is granted, it will not alter the fact that XRP does not meet the criteria for classification as a security.

Furthermore, Garlinghouse refuted the SEC’s claims that he and his associate Chris Larsen demonstrated recklessness in considering the crypto asset as non-security.

He labeled such allegations as baseless. He further emphasized their anticipation to once again disprove the agency’s assertions.

Stuart Alderoty, Ripple’s Chief Legal Officer, also clarified that no extraordinary circumstances are present in this matter that would warrant the court to deviate from the regular legal procedure.

Ripple’s legal representatives contend that it would be more fitting for the SEC to pursue an appeal of the court’s ruling after a final judgment accompanied by a comprehensive record.

SEC Resilience Against the Court Decision

In 2020, Ripple was accused by the SEC of engaging in an unregistered securities offering using its native token, $XRP.

After years of court battles, the summary judgment rendered by U.S. District Court Judge Analisa Torres on July 13 went in favor of Ripple and marked a partial triumph for the company.

The ruling from the court provided clarity that, specifically within the realm of programmatic sales on digital asset exchanges, XRP is not categorized as a security.

Nevertheless, she noted that vending XRP tokens as securities might apply in specific situations. This includes instances when they are sold to institutional investors. However, it doesn’t apply when the tokens are traded on exchanges for individual retail traders.

The judge’s ruling significantly impacted the SEC, as their lawsuit against Ripple was built on the claim that the company engaged in an unregistered sale of securities, even in secondary markets.

Following this, the SEC expressed its intention to contest the ruling and, on August 9, submitted an interlocutory brief to that effect.

In a letter to Judge Analisa Torres, overseeing the case, the SEC conveyed its belief that her decision warrants review by an appellate court.

The commission requested that the case be put on hold during the appeal process, citing the potential influence on several other ongoing court cases dependent on the appeal’s outcome.

The regulatory body emphasized the necessity of an interlocutory review, aiming for the ruling to be scrutinized while the case remains pending.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.