The United States Securities and Exchange Commission (SEC) has initiated a move to appeal a significant court ruling that favored Ripple Labs in its lawsuit against the regulatory body. The July verdict had determined that the sale of XRP, a cryptocurrency associated with Ripple, should not be classified as a security when sold to retail investors.
In an official letter dated August 9, addressed to Judge Analisa Torres, who presided over the case, the SEC expressed its belief that the court’s decision warrants a thorough reconsideration by an appellate court. The regulatory authority has urged Judge Torres to place the ongoing case on temporary hold during the appeal process. This plea is based on the SEC’s assertion that several other pending court cases could be profoundly influenced by the outcome of the Ripple appeal. Notably, the SEC is presently engaged in legal battles with several cryptocurrency firms, including industry giants Binance and Coinbase, over allegations of securities violations.
In the letter, the commission underscored its conviction that “Interlocutory review is warranted here,” emphasizing that the issues at hand involve pivotal questions of law. The regulatory body is calling for a comprehensive review of the ruling while the Ripple case remains unresolved, citing a substantial disparity of legal interpretation that has emerged within the jurisdiction. This intra-district divergence in viewpoints underscores the complexity and significance of the matter at hand.
Furthermore, the commission made reference to a prior decision in a separate lawsuit against Terraform Labs, in which Judge Torres had ruled that cryptocurrencies traded on exchanges could potentially be deemed as securities. This acknowledgment serves to amplify the SEC’s argument, highlighting the intricate and evolving legal landscape surrounding the classification of digital assets.
This recent development doesn’t go well with the crypto community.
SEC Addresses Ripple’s XRP Token Status
The letter is in response to the ongoing debate surrounding the regulatory status of Ripple’s XRP token. This development comes approximately a month after Ripple secured a partial victory in its legal battle with the SEC, which had significant implications for the classification of XRP as a security.
In a recent ruling, Judge Torres delivered a significant decision in favor of Ripple by determining that the XRP token, on its own, does not meet the criteria to be classified as a security under current regulatory standards. However, the ruling introduced an important nuance by indicating that the sale of XRP tokens could potentially be categorized as securities under specific circumstances.
Judge Torres clarified that instances where XRP tokens are sold to institutional investors may indeed qualify as securities transactions, triggering regulatory oversight by the SEC. On the other hand, the judge asserted that the sale of XRP tokens on exchanges to retail traders would not be subject to the same securities classification.