- The SEC references Judge Rakoff’s Terra ruling while seeking an appeal in the Ripple case.
- A potential two-fold litigation looms if Judge Torres denies the interlocutory appeal.
Ripple Vs SEC: An Interwoven Legal Battle
The Securities and Exchange Commission (SEC), in its quest for clarity in the Ripple legal discourse, has juxtaposed the case with the Terra ruling. The objective? To underscore the “controlling questions of law” surrounding the Ripple decision made by Judge Analisa Torres.
SEC’s Reference to Terra: A Contradictory Framework
The SEC is knocking on the appellate doors, seeking permission to challenge Judge Torres’ stance on Ripple’s sales dynamics, including the programmatic sale of XRP. To bolster its plea, the regulatory body spotlighted the contradictions embedded in rulings from two judges in the same district.
#XRPCommunity #SECGov v. #Ripple #XRP BREAKING: SEC Files Letter outlining its basis for filing a Motion for Leave to File an Interlocutory Appeal regarding “Programmatic” offers and sales to XRP buyers over trading platforms and Ripple’s “Other Distributions.”…
— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) August 9, 2023
For context, Judge Torres had delineated Ripple’s sales, differentiating between institutional and retail investors. While sales to institutional entities were deemed securities, programmatic sales were not. The underlying premise? Institutional participants held the expectation of profiting directly from Ripple’s initiatives, unlike retail buyers.
But this demarcation was questioned by Judge Jed Rakoff in the Terra case. Rejecting the reference to his counterpart’s ruling, Judge Rakoff held the Howey test – a seminal benchmark for security evaluation in the US – does not bifurcate its application based on the type of buyer.
This dissent forms the backbone of the SEC’s appeal strategy. The regulator is weaving Judge Rakoff’s observations into its narrative to secure an interlocutory appeal. The sequence was astutely noted by leading XRP commentator, Sherrie.
SEC’s Strategy: A Two-Pronged Litigation Approach?
The crypto sphere buzzes with speculation, divided on Judge Torres’ prospective response to the SEC’s appeal plea. Scott Chamberlain, a renowned legal pundit, anticipates a denial.
But a denial might merely be the beginning. The SEC has intimated plans to appeal the conclusive verdict if its interlocutory appeal doesn’t see the light of day. By their account, an early review could conserve both time and financial resources in litigations that mirror legal concerns.
In the eventuality of the SEC’s appeal on the final judgment post a denial of the interlocutory request, two distinct remedy litigations could unfold. The first could target Ripple’s sales to institutional stakeholders, with a second trailing if the SEC challenges the final judgment.
The SEC’s advocacy is clear: to avoid dual, extensive remedy litigations. As the legal intricacies unravel, the blockchain world keenly observes, understanding that the outcome will shape regulatory frameworks for years to come.