SEC appeals partial ruling in Ripple case

The U.S. Securities and Exchange Commission (SEC) told the U.S. District Court for the Southern District of New York that it will appeal the partial defeat in the ongoing dispute with Ripple.

The regulator will seek an interlocutory appeal of Judge Analisa Torres’s ruling and the continuation of the case under expedited proceedings.

Interim review is warranted here. These two issues relate to controlling questions of law on which there are substantial grounds for disagreement among the circuits, as evidenced by the existing split within the circuit.

The regulator pointed to the ongoing over the lawsuit against Terraform Labs and its CEO Do Kwon, where the judge rejected Torres’s approach.

In July she issued a ruling, concluding that Ripple’s XRP token sales to large industry players violated securities laws. But, in her view, programmatic sales and other distributions of the coins did not constitute an offer or sale of investment contracts.

SEC and Ripple have been involved in ongoing litigation with Ripple since 2020. The Commission accused the company of an unregistered sale of securities in the form of XRP totaling $1.3 billion. The defendants also include CEO Brad Garlinghouse and co-founder Chris Larsen.

According to Torres’s ruling, their guilt for unregistered sale of securities to institutional investors will be determined by a jury. On August 9 she stated that the trial would take place in the second quarter of 2024, according to The Block. The parties may file motions to exclude inadmissible evidence by December 4 and must indicate by August 23 the periods when they cannot participate in hearings.

Former SEC attorney John Reed Stark called Torres’s verdict in the Ripple case \”on shaky ground.\” In his view, the Commission has a good chance of successfully appealing it in higher courts.

The SEC, in a letter to Torres, noted that an interlocutory review \”would accelerate the conclusion of this litigation in an efficient manner, by eliminating the possibility of two separate proceedings\”.

In late July, a SEC spokesperson hinted at filing an appeal over the Ripple verdict.