The most recent development in the ongoing battle between Ripple Labs and the US Securities and Exchange Commission (SEC) has sent shockwaves across the cryptocurrency community. The Federal Judge, Analisa Torres has granted the US Security and Exchange Commission permission to file an interlocutory appeal in a ruling that found XRP, the native token of Ripple Labs, to not be a security. The case traces back to December 2020 when SEC filed a lawsuit against Ripple Labs along with its two executives, Brad Garlinghouse and Chris Larsen against charges that the company was offering unregistered security. It was developed on the 13th of July when Judge Torres declared that XRP is not a security when distributed through public sales but remains one under institutional sales. However, this recent decision on the acceptance of the SEC’s appeal is likely to have a severe impact not only on Ripple Labs but the cryptocurrency industry at large.
What is the Interlocutory Appeal?
According to US law, an interlocutory appeal is a legal appeal that occurs during an ongoing lawsuit while the final decision is still impending or the decision has been made by the trial court. In the case between SEC and Ripple Labs, SEC requested to file a motion for leave to bring an interlocutory appeal to the US Court of Appeals for the Second Circuit. The request was granted by Judge Analisa Torres on the 18th of August. Ripple Labs will also have the opportunity to file an opposition to the motion.
Ripple Lab’s Response
The Judges’ acceptance of the SEC’s appeal followed a few hours after Ripple had raised a strong objection to the possibility of such an appeal in this case. The legal team at Ripple presents three important arguments against the SEC’s appeal. First, they defended that such an appeal requires a pure question of law and that SEC’s appeal talks about no legal issues that need to be reviewed. Second, they argued that the SEC’s claims of the incorrect ruling are not sufficient grounds for the appeal. Third, the legal team at Ripple stated that an immediate appeal would not expedite the termination of the ongoing legal proceedings.
The CEO of Ripple, Brad Gralinghouse, resorted to Twitter stating that the request for the appeal will not change the fact that XRP is not a security. That part would not be up for any debate or trial.
The decision made by Judge Analisa Torres on the acceptance to file an interlocutory appeal by the SEC marks a significant step in the development of the SEC and Ripple Lab case. This could trigger a legal battle that could last for years degrading the reputation of Ripple Labs and taking the prices of XRP to the ground. Further, this will also have profound implications for the cryptocurrency industry raising questions on the regulatory clarity on the classification of digital assets. The SEC’s decision to appeal is a setback for Ripple Labs but also a sign that SEC is adopting a more aggressive approach to regulating cryptocurrencies. The outcome of the case is unknown but the crypto community closely follows the case as it might set new standards for the cryptocurrency industry in the US.
Disclaimer: This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
