On Wednesday, the U.S. financial watchdog sent notice that it will appeal a recent court ruling that determined XRP is not necessarily a security on its face. While other aspects of the SEC’s case go to trial, the SEC has said that it is seeking “leave to” appeal a portion of a recent judgement. If the regulator’s request for an interlocutory appeal is granted, the SEC and the government may be able to avoid having to go through two separate trials.
Specifically, the SEC seeks to certify the Court’s holding that Defendants’ ‘Programmatic’ offers and sales to XRP buyers over crypto asset trading platforms and Ripple’s ‘Other Distributions’ in exchange for labor and services did not involve the offer or sale of securities under [the Howey test].the SEC filing said.
The SEC recommended submitting an opening brief outlining the appeal on August 18, 2023, and highlighted that Ripple would have to reply by August 16 (a week following the letter’s submission). If the court approves the submission, Ripple will have two weeks to take action, and the SEC will have another week to respond to Ripple.
The SEC sent a letter to U.S. District Judge Analisa Torres in Manhattan on Wednesday, asking her to allow a federal appeals court to reconsider her ruling from July 13 that concluded the sale of Ripple’s XRP digital coin on public exchanges did not violate federal securities laws.
The SEC stated that an appeal could resolve legal issues where there were “substantial grounds for differences of opinion.”
It also said that a “large number” of other litigation, including its authority to enforce securities laws, were “particular consequence” of the conclusion of an appeal. For a long time now, the SEC has maintained that cryptocurrencies and other forms of digital money are securities within its purview for regulation much like stocks and bonds. In December of 2020, it filed a lawsuit against Ripple, CEO Brad Garlinghouse, and co-founder/Chairman Chris Larsen, alleging that the sale of XRP constituted an unregistered securities offering that fraudulently raised over $1.3 billion.
Torres asserted that the sale of XRP tokens on public exchanges did not violate any laws since buyers could not have reasonably expected to make a profit as a result of Ripple’s actions.
Partner at Hogan & Hogan, Jeremy Hogan tweeted that in their appeal, the SEC won’t challenge whether XRP is a security but rather their losses in programmatic and individual sales.