- SEC looks to appeal the recent court decision that XRP is not a security when sold to retail investors.
- The commission’s appeal comes after Ripple’s partial win regarding XRP’s securities classification.
SEC Questions Recent Ruling in Ripple Case
In a recent turn of events, the U.S. Securities and Exchange Commission (SEC) has opted to challenge the July court ruling concerning its lawsuit against Ripple Labs. The primary contention revolves around the sale of the XRP cryptocurrency. The verdict, given by Judge Analisa Torres, indicated that XRP’s sales to retail investors do not categorize it as a security.
AND… the SEC continues making questionable decisions, requesting an interlocutory appeal.
Note that it is NOT appealing whether XRP itself is a security – just its losses on the programmatic and individual sales issues. https://t.co/GziVLp23mT
— Jeremy Hogan (@attorneyjeremy1) August 9, 2023
On Aug. 9, the SEC, through an official letter to Judge Torres, expressed its belief that the decision calls for reconsideration by an appellate court. The commission has further urged for a pause on the ongoing case during the appeal. Their justification stems from the potential impact the appeal’s result could have on several other imminent court cases. Notably, the SEC is presently enmeshed in legal disputes with renowned crypto entities such as Binance and Coinbase, with accusations centered on potential securities violations.
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A Split Decision on Cryptocurrency Security
#The term “Interlocutory review” was highlighted by the SEC in its communication, emphasizing that such a review is appropriate given the current stage of the case. The agency noted that the underlying issues invoke critical legal questions, where differing opinions could arise, supported by the intra-district divergence already taking shape.
Further adding to its stance, the SEC is keen on getting validation for the court’s ruling that Ripple’s systematic XRP offers and sales across cryptocurrency exchanges, along with individual sales, should not fall under the securities umbrella.
Drawing parallels, the commission underscored a previous judgement in its case against Terraform Labs. This particular verdict contradicted Judge Torres’s decision, indicating that cryptocurrencies traded on platforms might also qualify as securities.
A look back to a month prior reveals a strategic win for Ripple Labs. Judge Torres had decreed that the XRP token, in its essence, does not qualify as a security. She further clarified that sales of XRP tokens might be deemed securities under specific scenarios, like when they are sold to institutional entities. However, such a classification would not apply when these tokens are traded on exchanges catering to retail traders.
It’s worth noting that amidst these legal maneuvers, the core debate isn’t necessarily about whether XRP, as an entity, is a security. Instead, the SEC’s appeal predominantly centers on the nuances of XRP’s programmatic and individual sales processes.
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