Ripple Labs, the maker of XRP, has just filed an opposition to an interlocutory appeal expected from the United States Securities and Exchange Commission (SEC), after the regulator expressed dissatisfaction with the recent Ripple victory.
According to the filing submitted on August 16, Ripple contested the interlocutory appeal, noting the expected appeal deviates from its previous focus. The blockchain firm suggested that the exceptional circumstances necessary for the interlocutory appeal does not exist, putting forward three main arguments in its opposition against the American watchdog’s request.
🚨NEW: @Ripple files its response to the @SECGov’s anticipated interlocutory appeal.
The company, @bgarlinghouse and @chrislarsensf oppose the appeal on the following grounds:
1. The Court's Order Does Not Involve a Controlling Question of Law.
2 The SEC Cannot Show a…
— Eleanor Terrett (@EleanorTerrett) August 16, 2023
Ripple Fights Back the SEC, Yet Again
To begin with, Ripple argued that an appeal requires a pure question of law and that the SEC’s request raises no new legal issues that need to be reviewed. In the second place, XRP lawyers claimed the SEC’s argument that the court verdict was “wrongly decided” is not sufficient, as the regulator must show that two courts are in clear conflict with each other over the subject issues, which isn’t the case here.
Last but not the least, Ripple’s lawyers argued that an immediate appeal will not advance the termination litigation proceedings. As a matter of fact, on August 17, Stuart Alderoty, Ripple’s chief legal officer took to X, explaining that no “extraordinary circumstance” exists in the matter that warrants the court to depart from normal legal procedure. He wrote,
“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.”
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
SEC Contiues to Challenge Court Ruling
The more-than-two-years-long Ripple vs SEC legal battle doesn’t seem to end as the regulator continues to challenge Judge Analisa Torres’ recent ruling that the XRP token is not a security when sold to the general public but it could be treated as one with regard to past sales to institutional clients, awarding Ripple a partial win.
Even after the court verdict, the SEC didn’t seem to be happy and on August 9, the regulator submitted a court filing in which it set out a basis for an interlocutory appeal that would contest the pro-Ripple ruling.
The new filing needs to be approved by the US SDNY for appeal, and then by the court of appeals. Once it jumps those hurdles, the SEC would need permission from the US Court of Appeals for the Second Circuit.
It seems, the SEC’s urge to appeal aginst the recent Ripple ruling gathered steam after United States District Judge Jed Rakoff, who is overseeing the SEC’s case against Terraform Labs, expressed contrasting views regarding the approach used in the Ripple vs SEC case.
He strongly criticized the distinction made in the Ripple lawsuit between public and institutional sales, claiming the Howey test does not differentiate between purchasers based on the origin of their coins, as all purchasers could reasonably expect that they will profit based on the defendants’ efforts.
Judge presiding over SEC/Terraform Labs case in new court filing rejects approach taken in Ripple ruling. Says he won't distinguish between crypto assets based on how they're sold — ie directly to institutional investors versus to retail investors on exchanges. pic.twitter.com/6ar0ocXjd8
— Ally Versprille (@allyversprille) July 31, 2023
XRP Enthusiasts Root for Another Win
Despite the American agency’s push for an appeal against the XRP maker, Ripple enthusiasts are betting big on another win against the SEC. Earlier this month, John Deaton, a prominent pro-XRP lawyer, asserted the blockchain firm won’t shy away from the SEC’s likely appeal, stating even if the regulator successfully challenges Torres’ application of the Howey Test.
The more I read the Torres decision the more I struggle to see the error. The source of the error cannot be the different treatment of the 3 categories of sales. As Torres J. noted it was the SEC who categorised these three types of sales./1 pic.twitter.com/cchLpSt1y2
— bill morgan (@Belisarius2020) August 6, 2023
Deaton emphasized that Torres could still rule the same way when looking at the Howey Test’s other factors, such as the “investment of money” and the existence of a “common enterprise.” Harbouring similar sentiment, Australian lawyer and digital asset enthusiast Bill Morgan suggested Judge Torres had recognized that the factual setting as a whole between institutional sales and programmatic sales was very different. highlighting that he sees “no error” in the judge’s ruling.
