Ripple Faces Another Hurdle as SEC Seeks To Appeal Court Decision

The ongoing legal battle between Ripple and the SEC centers on whether XRP should be classified as a security. Key developments include a July 2023 ruling in favor of Ripple for retail investors but not institutions. The SEC requested permission to appeal, citing differences in opinion on crypto regulations. Ripple opposed the appeal, claiming it would cause unnecessary delays. The SEC argued for efficiency and highlighted Ripple’s interest in avoiding required disclosures. Specific appeals concern two types of XRP sales.

Here’s Summary of Key Developments:

July 2023 Ruling: In July, US Judge Analisa Torres ruled in favor of Ripple, stating that most of its XRP sales did not constitute an offer of unregistered securities. This ruling applied to retail investors but not institutions.

SEC’s Request for Appeal: Following the July ruling, the SEC requested permission from the court to appeal the decision in August. The SEC argued that there were “substantial grounds for difference of opinion” regarding how securities laws apply to digital assets, citing other high-profile cases against crypto companies.

Ripple’s Opposition: Ripple opposed the SEC’s request for appeal, arguing that no extraordinary circumstances justified an appeal before all issues were resolved. Ripple suggested that the SEC’s appeal would only serve to delay the resolution.

SEC’s Response: The SEC disagreed with Ripple’s motion, asserting that an interlocutory appeal (an appeal while other aspects of the case are ongoing) would not prolong the process. The SEC argued that it has an institutional interest in efficiently resolving the litigation and that Ripple’s interest was in delaying the resolution so they could continue selling XRP without the required disclosures.

Specific Appeals: The SEC appealed against two types of XRP sales: programmatic sales to retail investors (which the court ruled did not violate securities laws) and “other distributions,” which include offers and sales of XRP in exchange for goods and services.

In summary, while Ripple scored a partial victory in the July ruling, the legal battle is far from over, as the SEC has requested the right to appeal. The outcome of this case will have significant implications for the classification of cryptocurrencies under U.S. securities laws.

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