In a significant development in the crypto world’s legal battle between Ripple and the US Securities and Exchange Commission (SEC), a federal judge has granted the SEC the opportunity to file a motion that could potentially allow it to appeal a groundbreaking ruling regarding the classification of the crypto XRP as a security.
The ruling, issued by Judge Analisa Torres of the US District Court for the Southern District of New York, ruled that XRP transactions conducted through exchanges do not violate securities laws.
Judge Torres allows the SEC an interlocutory appeal in the case against the crypto Ripple (XRP)
Judge Torres’ decision allows the SEC to request an interlocutory appeal, a type of appeal that addresses specific legal issues before the entire case is concluded.
This marks a crucial moment in the case, as it could open the door for the SEC to challenge the ruling that Ripple did not violate securities laws by making XRP available to retail traders through cryptocurrency exchanges.
The SEC had announced its intention to file the appeal after hinting at it in July, and now has until a set deadline to officially file the motion. Ripple, on the other hand, has been given until 1 September to respond to the motion, while the SEC will have a chance to respond by 8 September.
If the SEC’s motion is approved, the company can proceed with the actual appeal of the initial ruling.
However, this decision is not without its critics and complexities. Stuart Alderoty, Ripple’s Chief Legal Officer, has publicly voiced the company’s opposition to the SEC’s request, pointing out that the circumstances do not justify a departure from the established legal rule under which all issues relating to all parties must be resolved before initiating an appeal.
This position highlights the continuing contention between the two entities, even on issues of procedural significance.
Crypto: it seemed over for Ripple (XRP), but the SEC still has a chance
Despite the legal maneuvering, market reaction to the judge’s ruling was relatively contained. The price of XRP saw minimal movement in response to the announcement. In the 24 hours following the ruling, the cryptocurrency suffered a modest decline of about 4%, according to CoinGecko data.
Industry experts offered their perspectives on the potential implications of this decision.
Bill Hughes, Senior Counsel and Director of Global Regulatory Matters at ConsenSys, commented on the SEC’s uphill battle to get the appeal approved. He noted that the legal standard required for an interlocutory appeal is difficult to meet and that the SEC’s own prior statements could undermine its arguments for an appeal.
Hughes pointed out the potential difficulty of persuading the court when the SEC appears to be speaking in contradictory terms.
Dave Rodman, founder and managing partner of the Rodman Law Group, addressed the mechanics of the appeal process itself.
Rodman clarified that although the appeals process does not stop the entire proceedings in their tracks, the SEC’s success in getting approval from both Judge Torres and the Second Circuit Court of Appeals could lead to a suspension of all proceedings until the appeal is resolved.
This could introduce further delays and uncertainty into the legal proceedings.
As the legal battle continues to unfold, the cryptocurrency industry is watching with keen interest.
The classification of digital assets as securities has far-reaching implications, not only for Ripple and XRP, but also for the broader cryptocurrency market and its regulatory environment.
The outcome of this case could potentially set a precedent for the treatment of other cryptocurrencies under US securities laws.
Conclusions
In conclusion, Judge Torres’ recent decision to allow the SEC to file a motion for an interlocutory appeal marks a pivotal point in the legal saga between Ripple and the SEC.
Although the SEC’s pursuit of an appeal is not without its challenges and criticisms, it underscores the complexity of the regulatory landscape surrounding cryptocurrencies. As both sides continue to present their arguments and the legal process unfolds, the final outcome could shape the future of cryptocurrency regulation in the United States.
The broader implications of this case extend beyond Ripple and XRP, impacting the entire industry and its relationship to securities laws.
Source: https://en.cryptonomist.ch/2023/08/18/sec-ripple-xrp-crypto-danger-again/