Judge Analisa Torres of the U.S. District Court for the Southern District of New York has granted the SEC permission to apply for an interlocutory appeal in its Ripple Labs case.
Judge Torres received consent after the SEC wrote on August 9 that her ruling might influence other court proceedings. According to U.S. law, an interlocutory appeal is a trial court judgment appealed while further proceedings continue.
The Judge’s July 13 ruling said that the SEC would be put to their proofs at trial regarding their claim against Chris and me. We look forward to proving the SEC wrong as a matter of fact and law (again). 2/2 https://t.co/qvS34XZbVJ
— Brad Garlinghouse (@bgarlinghouse) August 16, 2023
This development follows a previous ruling by Judge Torres on July 13, stating that Ripple’s XRP coin is not a security when distributed in public sales, but is considered a security in institutional sales.
The case against Ripple has been ongoing since December 2020, when the SEC sued Ripple and its chief executives, Brad Garlinghouse and Chris Larsen, alleging that the company offered unregistered securities.
Ripple opposes the SEC’s request
The legal team for Ripple Labs argued against the SEC’s request for an interlocutory appeal on three main grounds. Ripple Labs’ legal team raised three primary arguments in response to the SEC’s request for an interlocutory appeal. One of their beforehand arguments was that the SEC’s motion didn’t provide any novel legal issues for the court to address before deciding whether or not to authorize an appeal.
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
Second, legal counsel for the SEC said that the agency’s claim that the court made an erroneous judgment was not convincing since the SEC would have to demonstrate that the two courts are in apparent conflict.
The legal team representing Ripple stated that initiating an appeal at this time would not result in a timely conclusion to the matter. The attorneys for Ripple also claimed that an instant appeal would not hasten the decision of the dispute.
Ripple’s chief legal officer, Stuart Alderoty, said,
“There is no particular scenario here that would warrant deviating from the rule requiring all issues as to all parties to be resolved before an appeal.”
Background of the Ripple case
The SEC filed suit against Ripple and its two top executives in December 2020, although the case had already been going on for a while. The question is whether Ripple‘s XRP cryptocurrency is constituted security under U.S. federal securities guidelines. The Securities and Exchange Commission (SEC) claims that Ripple conducted an unregistered issuance of securities when it sold XRP.
On July 13, Judge Torres issued a somewhat favourable judgement to Ripple. She ruled that the XRP coin is not a security when offered to individual investors. However, she also determined that sales of XRP tokens to institutional investors might be considered securities transactions.
Market reaction to legal developments
The changing regulatory landscape has impacted XRP’s volatility. The price of XRP has nosedived from its intraday high of $0.8468 to its 4-week low of $0.4681 after the SEC‘s request for an appeal became public. If the negative sentiment persists and breaches the $0.4681 mark, the next significant threshold would be the $0.4000 support level.
XRP/USD 1-day price chart (source: CoinGecko)
The Ripple Labs’ wrestle with the SEC continues, and investors, traders, and stakeholders are eager to see how this legal squabble affects XRP’s market trajectory. Ripple’s response will be actively awaited as the SEC presents its case for the interlocutory appeal. In the end, the result will almost certainly have far-reaching implications for the cryptocurrency sector as a whole.