The US Securities and Exchange Commission (SEC) is expected to file an appeal against a ruling made by Judge Analisa Torres last month regarding the legal status of XRP.
On July 13, Torres ruled that the sale of XRP tokens on exchanges was not prohibited by securities regulations because it could not be deemed a securities offering. However, she also said that XRP traded to institutional investors would be regarded as securities in the interim.
The SEC will contest the former part of the decision, per a Wednesday court filing, where the regulator said it was looking for an interlocutory appeal against the XRP-issuer Ripple Labs.
“Specifically, the SEC seeks to certify the Court’s holding that Defendants’ ‘Programmatic’ offers and sales to XRP buyers over crypto asset trading platforms and Ripple’s ‘Other Distributions’ in exchange for labour and services did not involve the offer or sale of securities under [the Howey test],” said the SEC in its letter to Judge Torres.
According to the legal officer at Ripple, Stuart Alderoty, the SEC’s move comes from the fact that they do not have the “right” to appeal at the present moment.
The appeal requires approval from both the District and Circuit court in a short time horizon. Otherwise, the regulator would wait for the trial to end before filing a formal appeal, a process which could potentially take years, according to Ripple CEO Brad Garlinghouse.
With that said, the high profile Ripple case has been all the rage because it might provide a basis for other crypto cases against crypto firms such as Binance and Coinbase. The SEC’s enforcement actions against the two exchanges could be somewhat contingent on whether underlying assets are unregistered securities, with the XRP case setting a precedent that works against the SEC.
The government agency is aware of this fact, noting in a letter to Judge Torres that the ruling is of “particular consequence” to its enforcement of securities laws and to “a large number of pending litigations.” As part of its justification for the interlocutory appeal, the SEC noted “an intra-district split that has already developed”, which is reflective of “substantial ground for differences of opinion.”
Ripple has until August 16 to respond to the letter and the SEC has proposed to file a brief explaining the appeal on August 18.
This week, Bitstamp exchange released a press release stating that it will halt US trading for SEC-flagged cryptocurrencies come August 29th.
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