The U.S. Securities and Exchange Commission (SEC) is preparing to appeal a recent court decision related to Ripple Labs, according to a filing made on August 9. The filing made with the U.S. District Court for the Southern District of New York is expected to have far-reaching consequences for how the SEC oversees the cryptocurrency sector.
Previously, in a ruling made in July, Judge Analisa Torres decided that certain sales of Ripple’s XRP token did not break securities laws per a specific blind bid process. However, she also determined that other direct sales of XRP to institutional investors were indeed securities. The SEC now intends to challenge the decision, specifically focusing on the part concerning programmatic sales and other distributions of XRP.
Stuart Alderoty, Ripple’s chief legal officer, indicated that Ripple is prepared to respond to the regulator, stating:
The SEC does not have the “right” to appeal just yet, which is why they are asking permission to file an “interlocutory” appeal. Ripple will file its response with the Court next week. Stay tuned.
The SEC’s decision to appeal follows a recent case against Terraform Labs, where a judge did not agree with Torres’ approach. The SEC thinks that an interlocutory review would help conclude the litigation more efficiently.
The legal conflict between the SEC and Ripple started in 2020 when the SEC accused Ripple of unlawfully raising $1.3 billion through the sale of XRP, labeling it an unregistered security. Ripple’s partial win last month was considered a significant moment for the crypto industry, causing the XRP token’s value to jump by 80%.
The SEC’s appeal could tackle legal questions where there’s substantial disagreement and could significantly impact its ability to enforce securities laws. The SEC has consistently argued that cryptocurrencies are securities and should be regulated as such.
Additionally, Judge Torres is planning to schedule a jury trial for Ripple, its CEO Brad Garlinghouse, and co-founder Chris Larsen in the second quarter of 2024. By December 4th of, 2023, both the SEC and Ripple are required to file pretrial motions known as motions in limine. These motions seek to exclude certain evidence from being used at trial, as explained by Cornell Law School. They must also inform the court of any dates they will be unavailable by the deadline of August 23rd.
