The United States Securities and Exchange Commission (SEC) has officially filed a motion to certify an interlocutory appeal in the ongoing legal battle against Ripple Labs and its executives.
The motion, submitted to the court, requests certification for two key holdings in the court’s summary judgment order issued on July 13, 2023.
Legal Showdown With Far-Reaching Implications
The first ruling the SEC seeks to appeal is the court’s determination that Ripple’s “Programmatic” offers and sales of XRP over crypto asset trading platforms “could not reasonably” lead investors to expect profits from the efforts of others.
The second ruling concerns the court’s determination that Ripple’s “Other Distributions” of XRP as a form of payment for services did not meet the legal definition of an “investment of money” under the SEC v. W.J. Howey Co. case.
Furthermore, the SEC argues that an immediate appeal is warranted under legal rules due to controlling legal issues and substantial grounds for a difference of opinion.
The two rulings in question were resolved as matters of law based on an undisputed factual record. They significantly impacted the SEC’s claims against Ripple and its executives in Judge Torres’ court ruling, which gave Ripple a partial win over the SEC’s claims.
According to the filing, one of the reasons cited for the appeal is a recent disagreement by another court in the same district regarding the ruling on Programmatic Sales.
The SEC points to SEC v. Terraform Labs Pte. Ltd., where the court declined to distinguish between coins sold directly to institutional investors and those sold through secondary market transactions to retail investors. This disagreement highlights the need for an appellate resolution on the matter.
Additionally, the SEC argues that obtaining an appellate ruling on these issues now would materially advance the ultimate termination of the litigation.
If the appeal is granted, it will allow the court to assess the appropriate remedies in a single proceeding instead of multiple rounds of litigation. This approach would save time and resources for all parties involved.
The SEC also emphasizes the broader implications of these legal issues for the crypto asset industry. The resolution of these questions could impact pending cases involving crypto assets offered by issuers on crypto asset trading platforms and cases where issuers have distributed such assets for non-cash labor and services.
SEC’s Filing In Ripple Case Not An Appeal?
In response to the recent motion filed by the SEC seeking certification for an interlocutory appeal in the SEC vs. Ripple case, legal expert and pro-XRP lawyer Jeremy Hogan clarified the motion’s nature.
Hogan emphasizes that the SEC’s filing is not an appeal but rather a “non-appeal motion,” which has important implications for the ongoing litigation.
Hogan explains that the SEC’s motion is not appellate because it does not initiate the process of appealing the court’s rulings. Instead, it requests the court’s permission to file an appeal, seeking certification for two specific holdings in its summary judgment order.
The distinction is crucial because an appeal, if granted, would involve a review by a higher court, whereas the current motion is focused on obtaining permission to appeal.
What is certain is that the outcome of this case has the potential to provide much-needed clarity on the regulatory treatment of digital assets and could have far-reaching implications for the crypto industry as a whole.
Featured image from iStock, chart from TradingView.com