Breaking: SEC files reply brief to Ripple in further support of its motion to certify an Interlocutory appeal
The US Securities and Exchange Commission (SEC) has filed a reply brief supporting its motion to certify an interlocutory appeal.
The filing is a reply memorandum requesting certification for appellate review, citing issues raised by the Court’s order on summary judgment.
With the above summary, the commission seeks to appeal along the lines of:
- Controlling case laws
- Substantial grounds for difference of opinion exist as to both questions of law
- Interlocutory appeal materially advancing case termination
- Stay pending appeal being vital to save judicial resources
According to the SEC, rulings on programmatic sales and other distributions are legal questions.
…Defendants, having failed to convince this Court that material facts were in dispute, seek to derail an otherwise proper interlocutory appeal by threatening to bury the Court of Appeals in factual issues on cross-appeal.
According to the SEC, a review of the Terraform labs case shows that the characterization that Terraform labs passed on the status of Howey of secondary market resales of the asset while the Ripple case did not is wrong.
Per the plaintiff, the defendant is ignoring and mischaracterizing the Supreme Court and Second Circuit cases involving the Howey guideline despite them being pivotal to the case regarding interlocutory appeal certification.
The commission, therefore, accuses Ripple of not having an institutional interest in the efficient resolution of the case, saying that the defendant only wishes to prolong litigation, thereby giving themselves time to continue selling XRP to public markets.
The commission also claims that certification would be an enabler to resource preservation for the Court and the two parties alike.
With these, The SEC asks the Court to grant the plaintiff’s motion for interlocutory appeal and stay further proceedings until the resolution of that appeal.
The next step involves Judge Torres making her decision, with the FXStreet team ready to bring you updates as they unfold.
SEC vs Ripple lawsuit FAQs
Is XRP a security?
It depends on the transaction, according to a court ruling released on July 14:
For institutional investors or over-the-counter sales, XRP is a security.
For retail investors who bought the token via programmatic sales on exchanges, on-demand liquidity services and other platforms, XRP is not a security.
How does the ruling affect Ripple in its legal battle against the SEC?
The United States Securities & Exchange Commission (SEC) accused Ripple and its executives of raising more than $1.3 billion through an unregistered asset offering of the XRP token.
While the judge ruled that programmatic sales aren’t considered securities, sales of XRP tokens to institutional investors are indeed investment contracts. In this last case, Ripple did breach the US securities law and will need to keep litigating over the around $729 million it received under written contracts.
What are the implications of the ruling for the overall crypto industry?
The ruling offers a partial win for both Ripple and the SEC, depending on what one looks at.
Ripple gets a big win over the fact that programmatic sales aren’t considered securities, and this could bode well for the broader crypto sector as most of the assets eyed by the SEC’s crackdown are handled by decentralized entities that sold their tokens mostly to retail investors via exchange platforms, experts say.
Still, the ruling doesn’t help much to answer the key question of what makes a digital asset a security, so it isn’t clear yet if this lawsuit will set precedent for other open cases that affect dozens of digital assets. Topics such as which is the right degree of decentralization to avoid the “security” label or where to draw the line between institutional and programmatic sales are likely to persist.
Is the SEC stance toward crypto assets likely to change after the ruling?
The SEC has stepped up its enforcement actions toward the blockchain and digital assets industry, filing charges against platforms such as Coinbase or Binance for allegedly violating the US Securities law. The SEC claims that the majority of crypto assets are securities and thus subject to strict regulation.
While defendants can use parts of Ripple’s ruling in their favor, the SEC can also find reasons in it to keep its current strategy of regulation by enforcement.
Can the court ruling be overturned?
The court decision is a partial summary judgment. The ruling can be appealed once a final judgment is issued or if the judge allows it before then. The case is in a pretrial phase, in which both Ripple and the SEC still have the chance to settle.
Author
Lockridge Okoth
FXStreet
Lockridge is a believer in the transformative power of crypto and the blockchain industry.
