SEC Vs. Ripple: Commission Urges Court To Grant Appeal Request In Latest Filing

The United States Securities and Exchange Commission has submitted a new filing pushing for the approval of its request to appeal the court’s judgment in the lawsuit against Ripple Labs. This comes exactly a week after the payment technology platform argued that the court should not certify the commission’s interlocutory appeal.

On September 1, Ripple asked the court to deny the SEC’s request to appeal the court’s ruling, as the summary judgment “does not present a controlling question of law suitable for interlocutory appeal.” The financial technology company also stated that the commission’s appeal request lacked the “exceptional circumstances required for interlocutory appeal.”

Ripple Trying To Delay Resolution To Continue Selling XRP, SEC Fires Shots

In a new filing submitted on Friday, September 8, the SEC urged the US District Court for the Southern District of New York to certify its motion for interlocutory appeal and “stay further proceedings until the resolution of that appeal.”

A part of the court document read:

The SEC respectfully requests certification for appellate review now because the issues raised by the Court’s order on summary judgment (D.E. 874) (‘Order’) present precisely the kinds of ‘knotty legal problems’ that led Congress to provide for interlocutory review.

The SEC asserted that, like the court, it has an institutional interest in the efficient resolution of this case. At the same time, the agency accused Ripple of trying to prolong the litigation so it may continue to freely sell XRP into public markets.

In the latest filing, the regulatory body argued that the verdicts on XRP programmatic sales, as well as other distributions, raise “legal questions” that are substantial enough for the certification of an interlocutory appeal. 

The SEC also mentioned that there are substantial grounds for difference of opinion, citing the Terraform case where the judge rejected the interpretation of the Howey test in the Ripple Labs ruling. 

The agency said in the filing:

At least two opinions within this District reach contradictory legal conclusions on these issues and many other courts are considering whether similar offers and sales (either involving blind bid/ask trading platforms or buyers purchasing in exchange for goods and services) satisfy Howey.

In July, Judge Annalisa Torres ruled that the XRP token is not a security when sold to retail investors, but the token can be deemed a security when directly sold to institutional investors. However, the SEC is looking to dispute Ripple’s partial victory, awaiting the court’s approval of its interlocutory appeal.

Crypto-Legal Community Labels The Latest Filing ‘Hypocritical’

It is worth noting that the SEC’s current legal stance contradicts past statements from the commission and its chair, Gary Gensler. 

The agency’s chair had, on numerous occasions, dismissed the need for fresh crypto regulation, stating that there are clear guidelines that cover the crypto market.

Ripple’s chief legal officer (CLO), Stuart Alderoty, was quick to point out this change in stance via a post on the X (formerly Twitter) platform. Alderoty referred to the latest filing as “another hypocritical pivot” by the SEC.

Another SEC filing, another hypocritical pivot…

After years of its chairman saying the “rules are clear and must be obeyed” the SEC now cries that an appeal is urgently needed to resolve these “knotty legal problems.” https://t.co/ige4neIWRD

— Stuart Alderoty (@s_alderoty) September 8, 2023

Likewise, Coinbase’s chief legal officer Paul Grewal challenged the rationale behind crypto firms being on “fair notice” if there are knotty legal questions, as the commission claims in the latest filing.

The Coinbase CLO has been quite vocal on the ongoing battle between the Securities and Exchange Commission and Ripple Labs. On September 1, Grewal questioned the inconsistent manner in which the SEC has been handling its cases.

XRP price moving sideways on the daily timeframe | Source: XRPUSDT chart on TradingView

 

Featured image from Unsplash, chart from TradingView