The US Securities and Exchange Commission (SEC) has crossed the first step in its effort to appeal against a trial court’s ruling stating that crypto firm Ripple’s XRP token sale on digital asset exchanges is not a security offering. Judge Analisa Torres has granted the securities watchdog's request to file a motion that will enable it to argue for permission to put forward an interlocutory appeal, CoinDesk reported today (Thursday).
SEC Moves to Seek Appeal
An interlocutory appeal involves challenging a decision made by a lower court before the case concludes. Not all appeals are permitted, and the appealing party must demonstrate that the decision could greatly influence the case's final outcome.
According to CoinDesk, the SEC must file the permitted motion by August 18th (tomorrow) and Ripple will have until September 1st to respond. Subsequently, the SEC can provide a counter-argument by September 8th.
In a ruling delivered in the middle of last month, the court concluded, in what the crypto industry considers a 'partial victory' for Ripple, that the crypto firm’s sale of XRP only violates federal securities law when sold to sophisticated investors. However, the SEC in a recent court filing disclosed that it was seeking permission to file a motionthat will move it a step closer towards getting approval to appeal the case.
“Specifically, the SEC seeks to certify the court’s holding that Defendants’ ‘programmatic’ offers and sales of XRP buyers over crypto asset trading platforms and Ripple’s ‘other distributions’ in exchange for labour and services did not involve the offer or sale of securities under [the Howey Test],” the SEC elaborated in the filing.
The Howey Test is a technique used to determine when a financial transaction qualifies as an ‘investment contract’ and should be regulated as a security dealing by the SEC.
Is the Appeal Feasible?
In stating its interest in appealing the case, the SEC argued that the case deserved an “interlocutory review” because the issues the agency raised “involve controlling questions of law on which there is substantial ground for difference of opinions."
“Timely appellate review is particularly warranted given the number of actions currently pending that may be affected by how the Court of Appeals resolves these issues,” the SEC further argued.
However, Stuart Alderoty, the Chief Legal Officer of Ripple, in a post published yesterday on the social media platform, X (formerly known as Twitter), contended that the SEC lack the basis for such a move.
“We oppose the SEC’s request for an interlocutory appeal,” Alderoty wrote. “There is no extraordinary circumstance here that would justify departing from the rule requiring all issues as to all parties to be resolved before an appeal.”
We oppose the SEC’s request for an interlocutory appeal. There is no extraordinary circumstance here that would justify departing from the rule requiring all issues as to all parties to be resolved before an appeal. https://t.co/hjNIwEZkSt
— Stuart Alderoty (@s_alderoty) August 16, 2023
Brad Garlinghouse, the Chief Executive Office at Ripple, also believes that the SEC’s request for appeal approval, even if granted, will not count for much.
Reminder - the request for appeal (even if granted) doesn’t change the fact that XRP is not a security. That’s not up for debate / trial. But the SEC continues to claim that Chris and I acted recklessly in believing that XRP is not a security. That’s utter nonsense. 1/2 https://t.co/pG7z0jsjlt
— Brad Garlinghouse (@bgarlinghouse) August 16, 2023
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This article was written by Solomon Oladipupo at www.financemagnates.com.
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