In a surprising turn of events, the interlocutory appeal filed by the U.S. Securities and Exchange Commission (SEC) against Ripple’s XRP ruling has been criticized as a significant misstep. Attorney and cryptocurrency enthusiast Greg Beuke expressed his belief that the SEC’s decision to pursue the appeal was detrimental to their case.
Misunderstanding of Judge Torres’s Ruling
Beuke argued that the SEC seemingly misunderstood the implications of Judge Torres’s ruling, which determined that sales over exchanges could not be considered investment contracts.
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The attorney highlighted that the ruling did not preclude sales over exchanges from falling under investment contracts. Consequently, the SEC’s selective use of statements and employee testimonies from Ripple failed to substantiate their case adequately.
Furthermore, Beuke pointed out that the SEC failed to present any evidence of a single XRP holder who claimed to rely on Ripple to increase the value of their holdings. Despite their attempt to rely on expert testimony, this evidence was dismissed. Additionally, the SEC did not address the affidavits provided by John E. Deaton, a prominent pro-XRP attorney, from the XRP community.
The Constrained Nature of Appeals
Beuke further emphasized that during appeals, parties are generally not allowed to present fresh evidence or novel legal arguments. As such, the existing record constrains the SEC, putting it at a disadvantage in terms of evidence relating to reasonable retail buyers.
While the 2nd Circuit might agree with the SEC’s foundational case theory during the appeal, Judge Torres’s decision will remain firmly grounded in the undisputed factual account. This discrepancy highlights the SEC’s lack of evidence regarding the perceptions of retail investors throughout the legal process.
As the plaintiff, the SEC must prove that it is more likely that a rational retail purchaser of XRP was aware of Ripple’s role and depended on their efforts for profits. Failure to meet this burden could result in a loss for the SEC. Notably, the SEC has not responded to the affidavits submitted by XRP holders, which were presented to counter their argument.
Read Also: Ripple CTO: An Asset Doesn’t Become A Security Because It Was Sold As One
Ripple CTO Affirms Approach to SEC Appeal
Providing further insight, David Schwartz, the Chief Technology Officer of Ripple Labs, addressed the SEC’s decision to appeal in a recent update. He clarified that the SEC interpreted the legal case as not yet concluded, leading to their pursuit of an appeal.
This procedural approach allows parties involved to appeal after the case’s finalization, streamlining the legal process and minimizing disruptions caused by multiple appeals on minor decisions.
Following Judge Analisa Torres’s ruling on July 13, which determined that XRP traded on digital asset exchanges should not be considered a security, the SEC moved forward with filing an appeal. However, the SEC’s decision was prompted by an unexpected development in the proceedings rather than dissatisfaction with the ruling favoring Ripple.
While the SEC proposes halting the proceedings until the appeal is resolved, Ripple maintains that the primary legal case should advance concurrently with the appeal process. This approach allows for the trial to progress while reserving a comprehensive examination of appeals once all other matters have been addressed.
Addressing rumors within the Bitcoin community regarding potential discussions of the SEC’s intent to appeal Judge Torres’s ruling to higher judicial instances, Schwartz confirmed that the court’s decision on the acceptance of the appeal petition could significantly impact the resolution of the legal dispute between Ripple Labs and the SEC.
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