September 1 is slated to be a significant day in the legal saga between Ripple Labs and the U.S. Securities and Exchange Commission (SEC). Ripple is expected to respond to the SEC’s interlocutory appeal, which seeks to overturn a prior ruling by Judge Analisa Torres. The ruling in question stated that Ripple’s XRP token did not breach federal securities laws when sold on trading platforms. The SEC has been given until September 8 to reply to Ripple’s forthcoming response.
Bill Hughes, Senior Counsel and Director of Global Regulatory Matters at ConsenSys indicated in a statement that the SEC faces a challenging path in securing approval for the appeal from Judge Torres. He pointed out that the legal criteria for such an appeal are stringent and that the SEC’s past statements could potentially weaken its current arguments.
Earlier, Judge Torres granted the SEC the green light to file a formal request for an appeal. This action doesn’t imply that the appeal has been approved; it merely allows the SEC to submit its motion. Ripple Labs had countered the SEC’s initial request, stating that no extraordinary circumstances exist that would warrant an appeal at this point.
John Deaton, a crypto-focused lawyer and founder of CryptolawUS, shared his view at the XDC Live blockchain industry conference. He suggested that Judge Torres is likely to reject the SEC’s interlocutory appeal and speculated that a full appeal from the SEC might not materialize until late 2024.
The legal skirmish between Ripple and the SEC is part of a larger discussion about the classification of digital assets. In July 2023, Judge Torres sided with Ripple, stating that its programmatic sales of XRP did not fulfill the criteria of the Howey test for being classified as securities. This decision was in contrast to another ruling involving Terraform Labs, adding complexity to the regulatory environment for digital assets.
Meanwhile, Dave Rodman, founder and managing partner of the Rodman Law Group, asserted in a statement that the ongoing case would not be paused due to the appeal process. However, if the SEC secures approval from both Judge Torres and the Second Circuit Court of Appeals, all proceedings might be put on hold until the appeal is resolved.
As Ripple gears up to submit its response to the SEC’s interlocutory appeal on September 1, both the crypto community and legal experts are closely monitoring developments. The outcome could significantly influence not only the future of Ripple and the SEC but also the broader landscape of digital asset regulation.
