The U.S. Securities and Exchange Commission (SEC) has submitted a memorandum of law seeking permission to appeal the court order issued on July 13 regarding Ripple. In tandem with this development, XRP’s price has seen a decline of over 13% within the past 24 hours, as per data from CoinGecko. The focus of the appeal centers on two key aspects: firstly, the determination that Ripple’s XRP offers and sales on crypto trading platforms would not lead investors to anticipate profits based on the efforts of others; secondly, the assessment that Ripple’s distribution of XRP as a form of service payment does not satisfy the definition of an “investment of money” by the precedent established by SEC v. W.J. Howey Co.
The SEC highlights the essential nature of these rulings, asserting that they address fundamental legal questions. It’s noteworthy that a different district court has already expressed disagreement with the initial verdict about Ripple, thus underscoring the necessity for a comprehensive appellate review. Ripple’s Chief Technology Officer, David Schwartz, recently downplayed the significance of this decision.
At the heart of the legal conflict lies the question of whether Ripple’s offers and sales of XRP qualify as “investment contracts” in line with the criteria set forth by the Howey test. While the court recognized that the Howey criteria were met in the context of institutional sales, discrepancies have arisen concerning the classification of coins sold directly to institutional investors versus those sold to retail investors via secondary markets.
The ongoing legal battle has garnered significant attention from industry leaders and experts within the cryptocurrency sphere. The SEC’s motion to appeal underscores the significance of establishing clarity within the rapidly evolving cryptocurrency landscape.
Ripple aims to affirm the court’s decision from July, while the SEC contends that an interlocutory review could yield the necessary clarity and thus urges an immediate appeal. The outcome of this motion holds the potential to shape the trajectory of similar cases in the cryptocurrency domain, thereby making it a closely monitored event for stakeholders and investors alike.
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