The U.S. Securities and Exchange Commission (SEC) submitted a filing last Friday that pushed the court of the Southern District of New York to appeal its ruling on the agency’s lawsuit against Ripple Labs.

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Fast facts

  • The SEC requested the court review its prior ruling by Judge Analisa Torres, which posed “knotty legal problems,” according to the filing.
  • In July, a summary judgment 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.
  • In the midst of the legal tussle, Ripple Labs announced last Friday that it will acquire Nevada-based crypto infrastructure startup Fortress Trust, giving Ripple a regulatory license in the state of Nevada. The terms of the deal were not disclosed.
  • In the recent filing, the SEC stressed the need for legal clarification, claiming that there are two or more colliding opinions in U.S. courts on whether similar offerings pass the Howey test. The Howey test is a legal test that the SEC uses to determine whether a transaction qualifies as an investment contract and thus constitutes a financial security. 
  • The SEC filed a motion to certify an interlocutory appeal against Ripple Labs on Aug. 18. 
  • Ripple then filed an opposition to the SEC’s motion last week that SEC’s claims to appeal are not legally sufficient to warrant one. The regulator first sued Ripple for allegedly offering XRP as an unregistered security in December 2020.

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