SEC: XRP Decision Needs Appeals Court Review
A judge approved the SEC’s request to pursue an appeal.
XRP Decision, A day after the judge stated the SEC may make its case, the United State Securities and Exchange Commission (SEC) requested permission on Friday to appeal the federal judge’s decision that XRP sales through exchanges did not violate securities legislation.
One day after she granted the motion, Judge Analisa Torres of the U.S. District Court for the Southern District of New York received a petition from the SEC asking her to certify for an interlocutory appeal (i.e., an appeal filed before the case as a whole is resolved). Because retail buyers of the asset on an exchange would not have the same expectations as an institutional buyer of XRP directly from Ripple, the federal regulator is specifically appealing the judge’s finding that Ripple’s programmatic sales of XRP did not violate securities law.
“The rulings that the SEC seeks to appeal were legal determinations about the existence of investment contracts based on undisputed facts. The undisputed facts (e.g., Order at 23 (Programmatic Sales are ‘blind bid/ask transactions’)) presents a legal question – can an issuer’s offers and sales on crypto asset trading platforms create a reasonable expectation of profits based on the efforts of others? This legal question is at issue in a number of pending cases, and a Second Circuit ruling will have ‘precedential value,'” the filing said.
The SEC regulator noted that its lawsuits against Coinbase and Dragonchain as well as other legal actions including bankruptcy could be affected by the XRP Decision.
SEC emphasized in its filing that its case concentrated on the XRP Decision sales rather than the asset itself.
“The SEC did not argue here or in Terraform that the asset underlying those investment contracts were necessarily a security (and the SEC does not seek appellate review of any holding relating to the fact that the underlying assets here are nothing but computer code with no inherent value),” the filing stated.
The deadline for Ripple to submit a response to the SEC’s motion is September 1, 2023. After then, the regulator will have another week to respond to the response. If Judge Torres grants the SEC’s request for an interlocutory appeal, the Second Circuit Court of Appeals will need to be petitioned to hear the case.
A day after the judge mentioned that the SEC could present its case, the U.S. Securities and Exchange Commission (SEC) sought permission to appeal the federal judge’s ruling that XRP sales on exchanges did not violate securities laws.
Judge Analisa Torres of the U.S. District Court for the Southern District of New York granted the SEC’s motion to appeal.
An interlocutory appeal is an appeal filed before the entire case is resolved. It allows parties to appeal specific legal issues during ongoing litigation.
The SEC is specifically appealing the judge’s finding that Ripple’s programmatic sales of XRP did not violate securities laws. The SEC argues that retail buyers’ expectations of exchanges differ from institutional buyers purchasing directly from Ripple.
The SEC is appealing whether an issuer’s offers and sales of a cryptocurrency on crypto asset trading platforms can create a reasonable expectation of profits based on the efforts of others. This question is relevant to multiple pending cases and a ruling by the Second Circuit Court of Appeals would set a precedent.
