The securities and exchange commission (SEC) has fired back at Ripple for asking a New York court to throw out the agency’s appeal against its win. The SEC on Friday said the appeal won’t be a prolonged process as it will only lead to one trial, and so should be upheld.
“The SEC, like the Court, has an institutional interest in the most efficient ultimate resolution of this litigation,” the agency said. “Defendants’ interest, by contrast, is to delay an ultimate resolution so that they may continue freely selling XRP into public markets without the disclosures that come with registration, to the tune of over $3 billion net ODL sales since 2020 alone,” it added.
Ripple has been in court since 2020 over allegations of selling XRP – a token the SEC refers to as a security – to millions of investors, earning over $3 billion in the process. Ripple however pleaded not guilty and refused to settle, which led to the case delaying until this year.
A New York District Court Judge Analisa Torres finally ruled in July that part of the XRP sales did not violate securities laws, giving Ripple partial victory over the SEC. As expected, the SEC filed for an appeal shortly after Ripple’s victory, which the company is asking the court to reject.
Putting the Appeal in Perspective
The SEC insists that Ripple and its executives, Brad Garlinghouse and Chris Larsen violated securities laws by selling XRP to investors in return for profits. To back up its case, the agency in its filing, cited several other cases in which a judge rejected the idea that a Ripple Labs decision might invalidate the SEC’s case against the payment platform.
“Facing the direct conflict between Terraform and this Court’s Order, Defendants try to reduce Terraform and every other relevant case to its facts and ignore other courts’ reasoning and interpretation of Howey,” the SEC said on Friday.
Meanwhile, the outcome of this appeal has significant implications for the crypto industry in the U.S. and the world generally. Other crypto companies like Coinbase have referred to Ripple’s July win as grounds for the allegations against it to be struck out.
This may be successful if Ripple wins in the appeal. However if the company loses, other crypto companies facing regulatory tussles in the U.S. may find it more difficult to succeed in their cases against the SEC, both now and in the future.
The outcome could also become a reference point for either the SEC or Ripple, depending on who wins eventually. This makes the case a strategic one that the entire industry looks forward to winning.
Debate on the Appeal
While Ripple battles the SEC in the pending appeal, the Ripple community has engaged in a heated debate on what could be the outcome of the appeal.
Stressing the importance of the case to the future of crypto, an XRP fan took to Twitter to question an ex-SEC official and specialist in securities law enforcement, Marc Fagel on whether the request for the appeal will be granted.
In response, Fagel said “I agree with those points, and think they should factor in. However, the specific requirements for interlocutory appeal are hard to meet. I think the odds are against granting the request unless the court looks to the points you raise.”