The United States Securities and Exchange Commission (SEC) has officially disclosed its plans to appeal Judge Analisa Torres’s ruling that determined XRP’s securities status.
According to the SEC on Wednesday, it filed a letter with the Southern District of New York seeking leave for an interlocutory appeal of the summary judgment in the case against Ripple Labs, which put XRP’s security status into question.
The letter read in part:
“’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 labor and services did not involve the offer or sale of securities under SEC v. W.J. Howey Co., 328 U.S. 293 (1946).”
The SEC referenced its lawsuit against Terraform Labs and Do Kwon, where the judge contradicted Torres’s approach.
Recall that Judge Torres ruled last month Torres ruled that Ripple’s programmatic sales of XRP did not violate securities laws because buyers have no knowledge of Ripple’s profits in the sales. However, she ruled that Ripple’s direct sales of XRP to institutional investors were securities.
What SEC Targets in Its Intended Appeal?
According to an SEC official in a media briefing, the securities regulator intends to specifically appeal the ruling on programmatic sales and other distributions, such as offers and sales of XRP in exchange for goods and services.
The regulator also disclosed in its motion that an “interlocutory review would “advance the termination of this litigation in an efficient manner by removing the possibility of two remedies phases and two trials.”
It can be recalled that the SEC and Ripple have been at loggerheads since December 2020, after the regulatory agency filed a lawsuit against Ripple for allegedly raising $1.3 billion via the sale of XRP, which it deemed as an unregistered security. Two of Ripple’s top executives, CEO Brad Garlinghouse and co-founder Chris Larsen, were also charged.
What’s next?
The SEC’s recent filing is just the first step to the appeal. It needs appeal approvals from the United States District Court Southern District of New York and the Court of Appeal.
If they both grant the appeal, then the Second Circuit would need permission, followed by the acceptance of the case for interlocutory appeal.
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