SEC appeals court’s Ripple ruling, says “wrongly decided”
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.
This move is aimed at potentially avoiding the need for two separate trials. The SEC’s decision 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.
“Specifically, the SEC seeks to certify the court’s holding that defendants’ ‘programmatic’ offers and sales to XRP buyers over crypto asset trading platforms and Ripple’s ‘other distributions’ in exchange for labor and services did not involve the offer or sale of securities under [the Howey test],” the SEC filing said.
“Interlocutory review is warranted here. These two issues involve controlling questions of law on which there is substantial ground for differences of opinion, as reflected by an intra-district split that has already developed,” the legal notice reads.
The ongoing legal battle between the SEC and Ripple began in 2020 when the regulatory agency accused Ripple of conducting an unregistered securities offering by raising $1.3 billion through XRP sales. The ruling in the Ripple case deemed XRP not a security when sold to the general public but potentially meeting the criteria for an investment contract for sophisticated investors.
The ongoing legal battle between the SEC and Ripple began in 2020 when the regulatory agency accused Ripple of conducting an unregistered securities offering by raising $1.3 billion through XRP sales. The ruling in the Ripple case deemed XRP not a security when sold to the general public but potentially meeting the criteria for an investment contract for institutional investors, meeting the conditions set by the Howey Test.
Ripple sees this court decision as a victory and a positive development for its growth in the US market. With its legal position clarified, the company is now looking to expand its operations in the UK and Ireland by seeking the necessary regulatory licenses for conducting crypto-related activities.
