Ripple asks court to toss SEC’s appeal in XRP case
Ripple Labs has opposed the U.S. securities regulator’s recent move to go for an interlocutory appeal about the summary judgment made by U.S. District Court Judge Analisa Torres.
In a letter sent on August 16 to Judge Torres in the Southern District of New York, Ripple’s lawyers explained that because the Securities and Exchange Commission (SEC) didn’t meet the requirements of the Howey test in relation to Ripple’s distribution of XRP — a legal aspect — the court should say no to the SEC’s request to file an interlocutory appeal.
The legal notice further reads: “Having failed to meet its burden to present facts that would support stretching Howey to cover all of Defendants’ distributions of the digital asset XRP, the SEC now does an about-face and rushes to appeal what it claims (at 1) is a purely “legal question” affecting all other digital-asset cases. The Court should reject this gambit because the SEC raised no such question.2 The SEC can appeal the Court’s decision in the normal course after a final judgment with a full record.”
“We oppose the SEC’s request for an interlocutory appeal. There is no extraordinary circumstance here that would justify departing from the rule requiring all issues as to all parties to be resolved before an appeal,” added Ripple Chief Legal Officer Stuart Alderoty.
An interlocutory appeal occurs when a decision made by a trial court is appealed while other parts of the case are still ongoing. This type of appeal is allowed only under certain situations. As such, Ripple’s legal team believes it would be better for the SEC to seek an appeal after there’s a final judgment and a complete record in place.
On August 10, the U.S. Securities and Exchange Commission (SEC) filed an “interlocutory appeal” to undo a judge’s recent ruling on Ripple’s sales of its XRP cryptocurrency. The SEC is seeking permission to appeal a portion of the decision while allowing other aspects of its case against Ripple to proceed to trial.
The SEC’s move comes after U.S. District Judge Analisa Torres issued a somewhat divided ruling, stating that certain programmatic sales of XRP didn’t violate securities laws, while direct sales to institutions did fall under securities laws.
The SEC’s appeal request follows its disagreement with the initial verdict, claiming that the court’s decision was “wrongly decided.” The agency argues that the ruling goes against “fundamental securities laws principles” such as the Howey test, which determines what falls under the category of an investment contract.
Ripple, on the other hand, remains confident in the judge’s ruling and expects that an appeals court will affirm or even strengthen it. The court’s approval is required for the appeal to proceed, followed by the U.S. Court of Appeals for the Second Circuit.