In the ongoing legal battle between Ripple Labs and the US Securities and Exchange Commission (SEC), Judge Torres has granted the SEC’s request to file an interlocutory appeal.
The decision, based on a review of the parties’ letters dated August 9 and 16, 2023, marks a significant milestone in the case.
The SEC’s successful request means that the regulatory body now has the opportunity to present a compelling case to the Second Circuit.
However, it’s important to note that Judge Torres has only granted permission for the SEC to file the motion for an interlocutory appeal.
SEC Aims To Secure Favorable Outcome In Ripple Case
According to journalist Eleanor Terret, the recent development grants the SEC the opportunity to present its arguments before the appellate court. This presents a significant opening for the SEC to challenge the previous ruling by Judge Rakoff and seek a different outcome.
In the Terraform Labs case against the SEC, Judge Rakoff strongly disagreed with the defendants’ assertions and explicitly rejected the rulings in Ripple, including Judge Torres’s application of the Howey test.
In his decision, Judge Rakoff concluded that, at the Rule 12 stage, the SEC had effectively met its burden of alleging that the tokens issued by Terraform Labs qualified as securities.
However, the responsibility of presenting a compelling case for the appeal lies with the SEC. The SEC will need to provide robust justifications to support their appeal to Judge Torres.
The court filing has outlined a timeline for the appeal process. The SEC is required to file its motion by August 18.
Subsequently, by September 1, Ripple and its defendants will have the opportunity to file their opposition papers. The SEC will then have until September 8 to file a reply, if necessary.
Ripple CEO And CLO Respond To SEC’s Request For Appeal
Ripple CEO Brad Garlinghouse and Ripple’s CLO Stuart Alderoty have recently addressed the ongoing legal battle between the firm and the SEC. Their statements emphasize Ripple’s stance on XRP’s non-security status and their opposition to the SEC’s request for an interlocutory appeal.
Garlinghouse took to social media on Tuesday to reiterate that, regardless of the appeal outcome, XRP should not be considered a security. He emphasized that this fact is not subject to debate or trial.
Garlinghouse further criticized the SEC’s claim that he and Chris Larsen (Ripple’s co-founder) acted recklessly in their belief that XRP is not a security, referring to it as “utter nonsense.”
He pointed out that the judge’s ruling on July 13 indicated that the SEC would need to present evidence supporting their claims against him and Larsen, which Ripple looks forward to refuting.
Stuart Alderoty, Ripple’s CLO, also expressed the company’s opposition to the SEC’s request for an interlocutory appeal. Alderoty argued that there are no extraordinary circumstances present that would warrant deviating from the usual rule requiring the resolution of all issues involving all parties before an appeal can be considered.
These statements from Ripple’s top executives underscore their unwavering conviction that XRP should not be classified as a security. Garlinghouse’s assertion that XRP’s non-security status is beyond debate aligns with Ripple’s long-standing position on the matter.
Pro-XRP Lawyer Foresees An Intense Legal Battle
John Deaton, a pro-XRP lawyer and founder of CryptoLaw, expressed his thoughts on the matter. He noted that the SEC’s categorization of different sales was not determined by Judge Torres, and he anticipates an interesting legal battle ahead between Ripple and the US watchdog.
He also mentioned that Judge Torres could potentially deny the motion for interlocutory appeal and offer an explanation for her decision, along with clarification regarding Judge Rakoff’s ruling.
However, irrespective of the outcome, it is expected that the legal proceedings will be further prolonged, potentially lasting another 3-6 months.
Featured image from iStock, chart from TradingView.com