Ripple objects to SEC’s use of Terra ruling to warrant appeal
Ripple has argued in a recent filing that the U.S. Securities and Exchange Commission (SEC) hasn’t presented a strong enough case to warrant an appeals court intervention in their ongoing legal dispute.
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.
The SEC is seeking approval from a federal judge to appeal her ruling, which found that Ripple’s sales of XRP did not violate securities law. If approved, the SEC would need to convince the Second Circuit Court of Appeals to take up the case.
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.
In their filing, Ripple contends that there are no significant legal questions at hand and that an appeal wouldn’t expedite the overall case resolution. Ripple added that the SEC hasn’t proven that different judges would disagree with the ruling or that an appeal would lead to a quicker conclusion of the case, all of which are prerequisites for the judge to grant an appeal.
In July’s ruling, Judge Analisa Torres found that Ripple had violated federal securities laws in selling XRP to institutional investors but not in making it available to retail investors on exchanges. Ripple argues that the factual basis for each case is different, leading to varying rulings. The SEC has until September 8 to respond to Ripple’s filing.
“This Court’s summary-judgment ruling relied on record evidence that Ripple made no ‘promises or offers’ to purchasers in Programmatic Sales. Terraform, by contrast, accepted the SEC’s allegations that Terraform and its founder promised all purchasers – those who bought directly from Terraform or from some other source – ‘rates of returns of 19-20% on the coin owners’ initial investment,” the filing reads.
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.
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.