The U.S. Securities and Exchange Commision (SEC) is seeking to appeal Judge Analisa Torres’ ruling in July that Ripple’s programmatic sale of XRP cryptocurrency did not qualify as sales of financial securities. The regulator argued that the ruling could have gone the other way, given differing opinions on its legal basis.
See related article: Blockchain Association joins Coinbase in pushing back against SEC over crypto crackdown
Fast facts
- On Wednesday, the SEC asked in a court filing that Judge Torres — the presiding judge in the case — allow the federal appeals court to review her July 13 decision that ruled Ripple’s XRP sales on public exchanges do not violate securities laws.
- The issue involves “controlling questions of law on which there is substantial ground for differences of opinion, as reflected by an intra-district split that has already developed,” said the SEC in the filing.
- The move came weeks after Ripple notched a partial victory in its lawsuit with the SEC. The regulator first accused Ripple of offering XRP as an unregistered security in December 2020. In July this year, a summary judgement by Judge Torres ruled that Ripple’s XRP sales to institutional investors violated securities laws, but sales on public exchanges to retail investors did not.
- Arguing that this ruling represented a matter of opinion, the SEC referred to another ongoing lawsuit between itself and Terraform Labs. The SEC accused the blockchain developer of alleged crypto securities fraud. On July 31, ruling Judge Jed Rakoff rejected Terraform’s motion to dismiss the case, expressing disagreement with Judge Torres’ decision on the Ripple ruling.
- As the lawsuit between SEC and Ripple is still ongoing, with the court to schedule a jury trial for the second quarter of 2024, “the SEC does not have the ‘right’ to appeal just yet which is why they are asking permission to file an ‘interlocutory’ appeal,” said Ripple Labs Chief Legal Officer Stuart Alderoty in a Thursday tweet.
- “Ripple will file its response with the Court next week. Stay tuned,” added Alderoty.
- So-called “interlocutory appeals” are appeals that occur before all claims are resolved in relation to all parties. They are only allowed under specific circumstances.
- A timely review of the court decision in the Ripple case “is particularly warranted given the number of actions currently pending that may be affected by how the Court of Appeals resolves these issues,” the SEC said.
- Apart from Ripple, the SEC has also sued various other cryptocurrency exchanges, including Binance and Coinbase, for alleged securities violations.
- Meanwhile, U.S.-based crypto exchange Bittrex, which the SEC sued in April for allegedly operating as an unregistered securities exchange, has agreed to settle the charges by paying a fine of US$24 million, according to the SEC on Thursday.
See related article: S.Korean prosecutors to submit XRP ruling to prove Terra-Luna as securities
(Updates to clarify Ripple and XRP sales specifics in first par)