Key Takeaways
- The SEC pursues an interlocutory appeal following Ripple’s lawsuit win.
- Legal disputes center on whether Ripple violated securities laws in offering XRP to retail investors.
- Expert opinions highlight the irony of the situation, with Ripple being blamed for prolonging litigation.
Following Ripple’s lawsuit victory, the SEC has filed its Reply Memorandum in further support of its Motion to Certify Interlocutory Appeal. Let’s take a dive into the details of the memorandum and what this entails.
The Memorandum
U.S Securities and Exchange Commission (SEC) has contended whether Ripple broke securities laws by offering XRP to retail investors through crypto exchanges. According to SEC, this is a matter that requires the intervention of an appeals court. In response to Ripple’s memo challenging this, the SEC has filed a strong rebuttal. They assert that an appeals court’s involvement is necessary.
The SEC indicated its intention to appeal Judge Analisa Torres’ ruling in the U.S. District Court for the Southern District of New York last month. The judge allowed the SEC to present its case and gave Ripple until September 1 to respond. The recent filing is a reply to Ripple’s opposition memo.
In July, Judge Torres determined that Ripple had violated federal securities law in its sale of XRP to institutional investors but not to retail investors. However, another judge in the same court, Judge Jed Rakoff, disagreed with this judgment in a different SEC case. The SEC referenced this disagreement in its initial memo and the recent filing to support its request for an interlocutory appeal, which would allow an appellate court to address certain legal questions while the case continues in the original court.
The filing stated that Judge Rakoff rejected the conclusion that the presence of “blind” trading platform-based transactions excludes the application of the Howey test under nearly identical circumstances (sales of the crypto asset by the issuer to investors on a platform in blind bid/ask transactions).
If Judge Torres approves the SEC’s motion, the SEC will need to present its case to the Second Circuit Court of Appeals. According to the SEC, having the appellate court address the legal disputes at this point could accelerate the overall case resolution in the future.
Expert Opinion
When James K. Fillan announced the news of the SEC’s recent filing, John E. Deaton commented on the situation’s irony. Others, like Neil Hartner, commented that the irony of the situation is that Ripple is being blamed for litigation being prolonged.
As the irony of the situation unfolds, the SEC is under scrutiny from analysts worldwide. Let’s see now how Ripple and the judges respond.
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