The United States Securities and Exchange Commission (SEC) has been granted permission to file a motion for leave to file an interlocutory appeal in its case against Ripple Labs. The securities regulator informed Torres in a letter dated August 9 that her decision could impact multiple pending court cases.
This decision, however, is not the judge’s official stance on the appeal but rather a means for the SEC to move forward.
Ripple Labs and its co-defendants, Brad Garlinghouse and Chris Larsen, opposed this request prior to the SEC’s decision to appeal. As a result, Ripple Labs has until September 1st to submit its counterarguments.
Why is the SEC going after Ripple?
This appeal focuses primarily on a decision made by Judge Torres concerning programmatic sales and other distributions of the XRP token. Specifically, in July she ruled that while programmatic sales of XRP did not meet the Howey test criteria, institutional sales did.
Moreover, Ripple Labs alleged that the SEC had reversed course. They argued that the SEC lacked the requisite evidence to support its claim, making it difficult to apply the Howey test to XRP’s distributions. Additionally, they argued that the SEC’s request for an appeal does not satisfy the necessary criteria. Consequently, Ripple Labs views this action by the SEC as a strategic pivot to adjust its approach to the digital asset sector.
On the other hand, the SEC has emphasized that their appeal seeks to circumvent lengthy litigation remedies. They cited potential ramifications of the initial Ripple Labs ruling on a variety of ongoing cases.
SEC can now file a motion against the Ripple ruling
Under U.S. law, an interlocutory appeal occurs when a trial court judgment is appealed while other aspects of the case are still ongoing. The decision empowers the SEC to submit a motion requesting permission to appeal a case to the Second Circuit by August 18. Additionally, Ripple can submit an opposition to the motion.
The ruling comes just a few hours after Ripple Labs opposed a potential appeal in the case. The attorneys for Ripple presented three primary arguments against the SEC’s request.
They first argued that an appeal requires a purely legal question and that the SEC’s request does not introduce any new legal issues that must be reviewed. In addition, they argued that the SEC’s claim of an erroneous court ruling is insufficient and that an imminent appeal would not advance the termination litigation proceedings.
The SEC sued Ripple and its two main executives, Brad Garlinghouse and Chris Larsen, in December 2020, alleging that the business was providing unregistered securities.
Garlinghouse recently told Bloomberg that the SEC would face a lengthy appeals process. “As a matter of law, the law of the land right now is that XRP is not a security. Until there is an opportunity for the SEC to file an appeal, which would take years, frankly, we are very optimistic,” he said. An appeal against the retail sales ruling, according to Garlinghouse, will simply strengthen Torres’ decision.
The appeal process will not halt the remainder of the case. Nonetheless, if the SEC obtains permission from both Judge Torres and the Second Circuit Court of Appeals to submit the appeal, the circuit court may halt all proceedings until the appeal is resolved.
Ripple price tanks
The market dynamics of XRP have suffered in light of these developments. The price of the crypto fell from its 24-hour peak of $0.8468 to its 30-day low of $0.5718.At press time, the price of XRP is $0.5778, a decrease of 8.59% from its daily high.
Notably, if this adverse momentum persists and breaches the $0.5718 level, the next significant threshold would be the $0.5000 support level, which has historically attracted buyers. In addition, XRP’s market capitalization and 24-hour trading volume have decreased by 3.5% and 13.0%, respectively, to $30,533,791,670 and $1,550,078,757.
Although the judge’s decision is a turning point in the SEC vs. Ripple Labs saga, the complete impact on XRP has yet to be realized. Investors, traders, and stakeholders are keenly observing the market trajectory of XRP in anticipation of the cascading effects of this legal dispute.
