A Significant Development in the SEC v. Ripple Case
In a significant development on 13 July 2023, Hon. Analisa Torres of the United States District Court for the Southern District of New York delivered her ruling on the lawsuit initiated by the SEC against Ripple Labs and its two senior executives, Bradley Garlinghouse and Christian A. Larsen, in December 2020. The court’s decision was mixed, granting some motions from both parties while denying others.
- The court clarified that XRP did not qualify as a “contract, transaction, or scheme” that met the Howey requirements of an investment contract.
- An interlocutory appeal allows a party to appeal a specific decision before the entire case concludes.
- The SEC expressed its intention to file an interlocutory appeal regarding two primary decisions from the July 13 ruling and sought to pause the district court proceedings during the appeal.
- Judge Analisa Torres granted the SEC’s request, allowing them to proceed with filing their motion for an interlocutory appeal.
- The SEC officially filed its NOTICE OF MOTION TO CERTIFY INTERLOCUTORY APPEAL on 19 August 2023.
The SEC’s Supporting Memorandum
In its supporting memorandum, the SEC outlined its reasons for the interlocutory appeal:
- The SEC disagreed with the court’s ruling on Ripple’s “Programmatic” sales and “Other Distributions” of XRP not meeting the criteria of securities under the Howey test.
- The SEC emphasized that the contested rulings were pivotal legal issues that could shape the case’s outcome.
- The SEC pointed to a differing opinion within the same jurisdiction on the Programmatic Sales ruling.
- The SEC argued that resolving these issues now would streamline the legal process and prevent the need to revisit them in future litigation stages.
The SEC believes that the July 13 rulings could significantly impact the regulatory landscape for digital assets.
The Next Steps in the Ripple Case
Ripple Labs and its executives have until 1 September 2023, to file their response to the SEC’s motion for an interlocutory appeal. Judge Torres will then decide whether to certify the appeal. If certified, the appellate court will review the specific rulings from the July 13 decision, potentially affirming or overturning Judge Torres’ rulings.
Hot Take: The SEC’s motion for an interlocutory appeal signals the significance of the July 13 rulings in the SEC v. Ripple case. The outcome of the appeal could have far-reaching implications for the regulatory landscape of digital assets.
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