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The U.S. Securities and Exchange Commission (SEC) has officially filed an appeal to challenge parts of Judge Analisa Torres’ July 13, 2023, ruling in the high-profile Ripple lawsuit. This development puts an end to weeks of speculation about the SEC’s next move in the long-running case involving Ripple Labs and its cryptocurrency, XRP.
The appeal, filed just five days before the October 7 deadline, signals the SEC’s intention to continue its legal battle against Ripple, potentially prolonging one of the most significant legal battles in the crypto industry.
Ripple’s Legal Battle And The SEC’s Challenge
The Ripple lawsuit has been closely watched by the crypto industry, as its outcome could have far-reaching implications for how cryptocurrencies are regulated in the U.S. On July 13, Judge Torres ruled that Ripple’s programmatic sales of XRP did not violate securities laws, while also imposing a $125 million fine on Ripple for selling XRP to institutional investors. While some hoped this ruling would close the case, others anticipated the SEC might challenge the decision, given the broader regulatory implications.
Fox Business journalist Eleanor Terrett had earlier reported that a former SEC lawyer predicted the regulator would “probably” appeal Judge Torres’ decision. According to the lawyer, the SEC was particularly focused on overturning the verdict regarding Ripple’s programmatic sales, which were deemed non-securities transactions. The regulator aims to prove that this part of the ruling is incorrect and seeks to reestablish XRP as a security.
The Implications of the SEC Appeal
The SEC’s appeal, filed with the U.S. Court of Appeals for the Second Circuit, will now lead to a reexamination of the case. This could potentially extend the legal battle for months, if not longer.
The crypto community has expressed mixed reactions to the SEC’s decision. Pro-XRP lawyer John Deaton has been vocal about his belief that the SEC’s appeal is a waste of taxpayer money. He argues that the regulator is unlikely to succeed, particularly because it failed to establish a “common enterprise” between Ripple and XRP buyers, a key element of the Howey Test used to determine whether an asset qualifies as a security. Deaton also noted that if the appeal fails, the case will likely return to Judge Torres for further proceedings.
Meanwhile, former SEC lawyer Marc Fagel shares a similar sentiment, stating that the SEC does not have sufficient evidence to prove Ripple’s promotional materials were influential in buyers’ decisions. However, not all legal experts are pessimistic about the SEC’s chances. Ex-SEC lawyer James Farrell pointed out that the appellate court’s “de novo” review standard allows the judges to reevaluate evidence without being bound by Judge Torres’ previous findings, leaving the door open for a different outcome.
What’s Next for Ripple Labs?
The SEC’s decision to appeal prolongs the uncertainty surrounding Ripple and XRP. For Ripple Labs, this means continued legal expenses and a protracted legal battle. However, it also provides an opportunity for the company to further solidify its legal standing and potentially achieve a more favorable outcome in the long run.
Also Read: Ripple vs. SEC – Garlinghouse Vows To Fight As XRP Drops 10% Amid Appeal
For the broader crypto market, the Ripple case remains a pivotal moment that could set important precedents for how cryptocurrencies are regulated in the U.S. With the SEC pushing to assert its regulatory authority over XRP, the outcome of this appeal could influence future cases involving other cryptocurrencies.
As the case moves to the appellate court, the crypto industry will be watching closely to see if the SEC can successfully overturn Judge Torres’ ruling or if Ripple will emerge victorious once again.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
