SEC to appeal Ripple decision on XRP security status.
SEC to appeal Ripple decision on XRP security status.
Ripple’s XRP Ruling: A Temporary Victory for the Crypto Industry
In a groundbreaking mid-July ruling, Judge Analisa Torres delivered a temporary victory for the embattled crypto industry by stating that sales of Ripple’s XRP token did not constitute a security when sold programmatically or through the open market.
This ruling had immediate ramifications, leading prominent crypto exchanges to rush and re-list XRP. However, the Securities and Exchange Commission (SEC) made it clear that they would appeal the decision, especially as a different judge expressed doubts over Torres’s arguments in a separate case. In a letter filed on Wednesday, the SEC indicated their intention to seek an appeal of the judge’s holding on programmatic sales.
The Ripple case is one of the major battles in the nascent blockchain industry. Founded in 2012, Ripple is one of the highest-profile crypto companies. However, its XRP token has faced criticisms and regulatory scrutiny, just like other digital asset firms. In 2020, the SEC charged Ripple with raising over $1.3 billion through an unregistered digital asset securities offering.
While many argue that XRP differs from popular cryptocurrencies like Bitcoin and Ether due to its centralized structure, the case revolves around a central debate in the sector: whether cryptocurrencies should be regulated as securities or commodities.
The judge’s ruling, which found that XRP alone does not constitute a security, and that sales of XRP were only a security when sold to sophisticated investors, seemed to offer hope for the rest of the industry. Currently, the SEC has active lawsuits against major exchanges such as Coinbase and Binance for offering unregistered securities. Judge Torres’s ruling, however, suggested that such programmatic sales would be out of the SEC’s jurisdiction.
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It’s worth mentioning that the mid-July ruling was split, with Judge Torres leaving some questions for a later jury trial. These questions include whether two Ripple executives were liable for the unlawful offer and sale of securities. Earlier on Wednesday, she announced her intent to hold the trial in the second quarter of 2024. The fact that the case is still pending complicates the appeal process, leading the SEC to file a motion to seek leave to file an interlocutory appeal.
In its letter, the SEC stated that it would seek to stay the court’s proceedings, including the scheduling order, during its motion and potential appeal. The agency argued that the ruling’s consequences extended to other pending litigations against Coinbase, Binance, and Huobi founder Justin Sun. Additionally, the SEC pointed out that a different judge in a separate case involving Terraform Labs, the developer of the failed TerraUSD stablecoin, had displayed “substantial grounds for difference of opinion” regarding the question of programmatic sales.
According to the schedule outlined in the letter, Ripple’s response would be due on August 16, and the SEC would file its opening brief two days later. If granted, the appeal would be heard in the U.S. Court of Appeals for the Second Circuit.
This ongoing legal battle between Ripple and the SEC is of great significance to the blockchain industry and has far-reaching implications for how cryptocurrencies are regulated. The outcome will shape the future landscape of the industry and will have a significant impact on the way digital assets are bought, sold, and traded. As the appeal unfolds, all eyes in the crypto world will be closely watching, eagerly anticipating the final verdict.
