The U.S. Securities and Exchange Commission (SEC) is not giving up on its case against Ripple, the company behind the XRP cryptocurrency. The regulator has filed a motion to appeal a court ruling that found that XRP was not a security when sold to retail investors on public exchanges.
The SEC sued Ripple in December 2020, alleging that the company and its executives raised over $1.3 billion through an unregistered securities offering of XRP. Ripple argued that XRP was a digital asset, not a security and that the SEC had no authority to regulate it.
The SEC Doubles Down on Its Intention to Regulate Crypto
In July 2023, Judge Analisa Torres of the U.S. District Court for the Southern District of New York partially granted Ripple’s motion for summary judgment, ruling that XRP sales on public exchanges did not violate securities laws.
However, she also found that Ripple’s sales to institutional investors did constitute securities transactions and that Ripple’s executives, Brad Garlinghouse and Christian Larsen, could be held liable for aiding and abetting the offerings.
The SEC has now asked Judge Torres to allow it to file an interlocutory appeal, which is an appeal before the final judgment of the case. The SEC claims that the ruling involves “controlling questions of law on which there is substantial ground for differences of opinion” and that an appellate court review is warranted.
The SEC cites another case involving Terraform Labs, a blockchain developer that the SEC accused of crypto securities fraud. In that case, Judge Jed Rakoff rejected Terraform’s motion to dismiss the charges, disagreeing with Judge Torres’ decision on the Ripple case.
Ripple’s chief legal officer, Stuart Alderoty, said on Twitter that Ripple will file its response to the SEC’s motion next week. He also said that the SEC does not have the right to appeal yet and that it needs permission from the court to do so.
The SEC does not have the “right” to appeal just yet which is why they are asking permission to file an “interlocutory” appeal. Ripple will file its response with the Court next week. Stay tuned. https://t.co/zCeVZhYfxc
— Stuart Alderoty (@s_alderoty) August 9, 2023
The outcome of the SEC’s appeal could have significant implications for the cryptocurrency industry, as it could set a precedent for how digital assets are classified and regulated in the U.S. The SEC has also sued other crypto companies, such as Binance and Coinbase, for alleged securities violations.