Ripple Labs has vehemently opposed the Securities and Exchange Commission’s (SEC) pursuit of an appeal regarding a federal judge’s recent decision that the XRP token is not classified as a security when sold to the public. The contentious legal battle between Ripple and the SEC continues to capture attention, with Ripple’s latest move being a strong objection to the SEC’s bid for an appeal.
Ripple’s objection, filed recently with US District Judge Analisa Torres in New York, urges the judge to dismiss the SEC’s appeal. The company’s argument centers on the SEC’s haste in seeking an appeal, contending that the legal question at hand applies broadly to all digital asset cases. This assertion comes despite differing factual and legal procedural circumstances in various SEC enforcement actions.
The SEC’s appeal necessitates Judge Torres’s permission since her ruling was not a final judgment. Furthermore, the SEC aims to pause its lawsuit against Ripple, which accuses the company of offering unregistered securities, until the appeal process concludes.
July’s Favorable Ruling
In July, a US court handed Ripple a significant victory in its ongoing legal battle with the SEC. The court ruled in favor of Ripple, stating that selling XRP on digital asset exchanges did not constitute offers and sales of investment contracts. However, the ruling also stipulated that XRP qualifies as a security when sold to institutional investors, as it met the conditions outlined in the Howey Test.
The SEC argues that an immediate review is imperative, as the case’s outcome could have far-reaching implications for other cryptocurrency-related lawsuits, involving major industry players like Coinbase Global Inc. and Binance Holdings Ltd.
Differing Judicial Views
Interestingly, another federal judge, Jed Rakoff, expressed a contrasting viewpoint in a separate SEC case involving Terraform Labs and its founder, Do Kwon. Rakoff suggested that the Terra USD token might potentially be classified as a security when sold to retail investors.
Ripple’s recent filing highlights ongoing unresolved issues in its case, notably whether the sales of XRP to institutional investors fall outside the SEC’s jurisdiction. The company has reiterated its intent to challenge the judge’s ruling classifying these sales as securities transactions if the SEC’s appeal is granted.
Leadership Stance
Ripple’s CEO, Brad Garlinghouse, and Chairman, Christian Larsen, both named defendants in the case, have also aligned with Ripple’s opposition to the SEC’s appeal. They maintain that Judge Torres made the correct decision and argue that proceeding to trial is in the best interest of the public. Ripple’s objection adds to a series of challenges the SEC has encountered in recent times.
Notably, an appeals court in Washington recently overturned the SEC’s decision to block Grayscale Investments LLC’s proposed spot Bitcoin exchange-traded fund. The court mandated that the SEC set aside its initial rejection and reopen the review process, marking another setback for the regulatory authority in its efforts to oversee cryptocurrency markets.
