The U.S. Securities and Exchange Commission (SEC) requested approval on Friday to appeal a federal judge’s decision that XRP sales through exchanges did not violate securities law, a day after the judge stated the SEC could make its case.The SEC petitioned Judge Analisa Torres of the United States District Court for the Southern District of New York to certify for an interlocutory appeal (meaning an appeal filed before the overall case is resolved) one day after she granted the request.Due to the fact that individual buyers of the asset on an exchange would not have the same expectations as an institutional buyer of XRP directly, the federal regulator is expressly appealing the judge’s decision that Ripple’s programmatic sales of XRP did not breach securities law.
“The rulings that the SEC seeks to appeal were legal determinations about the existence of investment contracts based on undisputed facts. The undisputed facts (e.g., Order at 23 (Programmatic Sales are ‘blind bid/ask transactions’)) present a legal question – can an issuer’s offers and sales on crypto asset trading platforms create a reasonable expectation of profits based on the efforts of others? This legal question is at issue in a number of pending cases, and a Second Circuit ruling will have ‘precedential value,'” the filing said.
The SEC regulator noted that its lawsuits against Coinbase and Dragonchain as well as other legal actions including bankruptcy could be affected by the decision.The SEC emphasized in its filing that its case concentrated on the XRP sales rather than the asset itself.
“The SEC did not argue here or in Terraform that the asset underlying those investment contracts were necessarily a security (and the SEC does not seek appellate review of any holding relating to the fact that the underlying assets here are nothing but computer code with no inherent value),” the filing said.
The deadline for Ripple to submit a response to the SEC’s motion is September 1, 2023.After then, the regulator will have another week to respond to the response.If Judge Torres grants the SEC’s request for an interlocutory appeal, the Second Circuit Court of Appeals will need to be petitioned to hear the case.