The Regulator Strikes Back: SEC Files to Appeal Ripple’s Partial Court Victory

Although Ripple scored a partial court victory against the SEC earlier this summer, the battle is far from over, as the agency has formally requested the right to appeal against the decision.

The US securities regulator’s response comes after the deadline for Ripple to present its opposition passed on September 1.

• Recall arguably the most significant development in the crypto industry in July, when US Judge Analisa Torres ruled in favor of the blockchain company that most of its XRP sales did not constitute an offer of unregistered securities. However, that only counted for retail investors and not institutions.
• The Securities and Exchange Commission was quick to react and requested permission from the court to appeal the decision in August.
• By relying on other high-profile cases against crypto companies, such as the one against Terraform Labs, the regulator claimed back then that there were still “substantial grounds for difference of opinion” regarding how securities laws apply to digital assets.
• The blockchain firm opposed the SEC’s request, arguing that the court should reject the regulator’s request because there was no “extraordinary circumstance” justifying a departure from the rule that requires all issues to be resolved before an appeal.
• Expectedly, the agency has disagreed with Ripple’s motion by claiming that interlocutory appeal, which occurs when a trial court decision is challenged while other case aspects are still proceeding, would not prolong the process.

“The SEC, like the Court, has an institutional interest in the most efficient ultimate resolution of this litigation. Defendants’ interest, by contrast, is to delay an ultimate resolution so that they may continue freely selling XRP into public markets without the disclosures that come with registration, to the tune of over $3 billion net ODL sales since 2020 alone.” – reads the filing.

• In particular, the SEC appealed against the rulings on two XRP sales – programmatic and those classified by the court as “other distributions.” The former are the sales to retail investors, which the court ruled did not violate securities laws, while the latter include offers and sales of XRP in exchange for goods and services.