XRP Ruling Needs Appeals Court Review, SEC Says
A judge has granted permission to the U.S. Securities and Exchange Commission (SEC) to proceed with its appeal in an ongoing case involving XRP.
The SEC's request for the appeal comes after a federal judge's decision that sales of XRP through exchanges did not contravene securities law. The judge, Analisa Torres of the U.S. District Court for the Southern District of New York, allowed the SEC to present its argument, leading the regulatory body to petition for an interlocutory appeal the following day. This type of appeal occurs before the conclusion of the overall case.
In its appeal, the SEC is specifically contesting the judge's finding that Ripple's programmatic sales of XRP did not breach securities law. The basis for this determination is that individual investors purchasing XRP through exchanges have differing expectations compared to institutional investors procuring XRP directly from Ripple.
The SEC's filing underscores that the rulings it seeks to appeal were founded on legal assessments about the presence of investment contracts, primarily focused on undisputed facts. The central question pertains to whether a token issuer's offers and sales on crypto asset trading platforms can create reasonable profit expectations through the efforts of others. This legal query holds significance across multiple ongoing cases, and a ruling from the Second Circuit would hold substantial "precedential value," the filing emphasized.
The implications of this ruling are far-reaching, as it could influence other SEC cases, including ongoing legal actions against Coinbase and Dragonchain, as well as affecting matters such as bankruptcies.
Importantly, the SEC's argument is centered around the sales of XRP rather than the intrinsic nature of the asset itself. The regulatory body's position asserts that the underlying assets involved in these investment contracts are essentially computer code devoid of inherent value.
The timeline for further proceedings indicates that Ripple has until September 1, 2023, to submit a response to the SEC's motion. Subsequently, the regulatory body will have an additional week to reply to Ripple's response. If the SEC receives approval from Judge Torres for the interlocutory appeal, the case will need to be taken up by the Second Circuit Court of Appeals.