Recently, the United States Securities and Exchange Commission raised an interlocutory appeal on the classification of XRP as a security, seeking the Southern New York District Court that presides over the ongoing lawsuit to grant its petition against the defendant, Ripple Labs.
According to the report, the SEC Vs. Ripple Labs case further escalated last week when the commission sought the judge ruling over the case for permission to stage a dialogue concerning the security status of Ripple’s native token, XRP, which was recently ruled as a non-security asset by Judge Torress Analisa.
In July, during the judgment which favored the defendant, Judge Torres asserted that the sales of XRP through secondary platforms cannot be considered as sales of securities as they did not breach any security regulations. However, the Judge proceeded to say that the SEC is free to file for an interlocutory appeal which supposedly prompted the regulator’s latest movement in the ongoing legal brawl.
In addition, the SEC reportedly stated during the ruling section that exonerated Ripple that Judge Torres’ verdict might cause delay on other related lawsuits that involve the SEC and crypto entities. Hence, the Judge granted the commission the permission to excuse itself from the currency lawsuit and file for an interlocutory appeal. Therefore, the request was a response to the ruling of Judge Torres, according to the report.
Regulator Aims To Solve Pending Lawsuit Quickly
Furthermore, the report revealed that the SEC claimed that it must file for an interlocutory appeal rather than a traditional appeal because it is paramount to readdress the two rulings as soon as possible via immediate appellate inspection in order to facilitate the process allowing the court to have access to all documents for all the securities laws the Ripple might have violated in just one hearing.
But Ripple vehemently opposed the SEC’s appeal for dialogue, claiming that the commission does not have the required evidence to support its allegations; as such, it is challenging to apply the Howey test in classifying XRP’s status. In addition, the firm claimed that the regulations do not have the requirement to back its appeal.
According to the report, Ripple Labs considers the SEC’s appeal as a strategy to reform its approach in clamping down on the crypto industry. However, the SEC has highlighted some parts of the ruling on XRP’s by Judge Torres, indicating that an interlocutory appeal is necessary in order to avoid delay in deciding the case as it would help facilitate the verdict of many pending lawsuits similar to this.
Meanwhile, shortly after the security regulation body filed for its interlocutory appeal, the court reportedly gave Ripple Labs till the 1st of September to submit an official response to the plaintiff’s motion request. In addition, the court would provide the regulation an additional week to answer whatever response Ripple Labs comes up with, according to the report.
The SEC Express Dissatisfaction Over XRP Ruling
Commenting on the new development on Twitter, the CEO of Hogan & Hogan law company, Jeremy Hogan, gave his opinion on the SEC’s decision to appeal the ruling of Judge Torres that considers XRP a non-security token. According to the lawyer, the SEC consistently acts suspiciously, seeking an interlocutory petition.
Hogan added in his tweet that the commission is not even appealing on whether the XRP token might be a security to oppose the ruling. In addition, he said that the SEC questioning programmatic sales of XRP is totally different from the regulator appealing the non-security status of the token.
According to the interlocutory appeal document, the SEC asserted that the court’s verdict on “Other Distribution” varies from the existing formats under the Howey test that highlighted that investment of money could be made via other means apart from cash, such as the rendition of products and services.
Furthermore, Gary Gensler, the regulator’s chairman, previously stated that the SEC is discontented about Judge Torres’ ruling concerning retail investors. The chair claimed that cryptocurrency is packed with criminal activities, making it very unpredictable. Hence, the commission is committed to raising actions against crypto startups that violate rules, according to him.
Meanwhile, the report revealed that the SEC was not the only party that was disappointed with the ruling. Judge Jed Rakoff expressed his dissatisfaction as he claimed that the Howey test never differentiates between retail or institutional sales.
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