The United States Securities and Exchange Commission (SEC) claimed on Friday that the issue of whether or not Ripple broke the law when it made XRP available to ordinary investors by listing it on cryptocurrency exchanges requires the involvement of an appeals court.
As part of its ongoing action against the cryptocurrency firm closely linked to the XRP cryptocurrency, the SEC issued a response to a Ripple letter that made the opposite argument. Friday’s filing vehemently refuted Ripple’s contention that the SEC hadn’t provided a compelling case to support an appeal last week.
“The Defendants themselves say that the issues have industry-wide significance and are of special consequence,” the filing said.
The SEC indicated last month that it intended to appeal Judge Analisa Torres’ decision in the U.S. District Court for the Southern District of New York, and shortly after, it requested the judge’s approval. The judge let the SEC to deliver its argument and gave Ripple till September 1 to present its response. The filing on Friday is a response to Ripple’s memo of protest.
Judge Torres found in July that Ripple had marketed XRP to institutional investors in violation of federal securities law, but not to regular investors. When making his decision in a second case, also brought by the SEC, Judge Jed Rakoff of the same court expressed his disagreement with the verdict. In an effort to persuade Torres to grant the so-called interlocutory appeal, which allows an appellate court to take up some legal issues while the case is still pending in the original court, the regulator referred to this in both its first memo and Friday’s submission.
According to the filing, “[Judge Rakoff] did reject this Court’s legal conclusion that the existence of “blind” platform-based transactions for trading precludes the application of Howey as a matter of law, under practically identical facts (sales of the cryptocurrency asset by the issuer to investors on a platform in blind bid/ask transactions)”.
The SEC will have to argue its case before the Second Circuit Court of Appeals if Judge Torres grants the SEC’s motion.
The SEC argued that having the legal arguments resolved by the appeal court now could hasten the eventual outcome of the case.