The United States The Securities and Exchange Commission has filed a motion asking the court to grant its request to appeal a ruling in Ripple Labs’ lawsuit that held the XRP (XRP) token was not a security when sold to retail investors .
The agency argued that “difficult legal issues” related to the judicial application of the law — particularly the Howey test — warrant a review.
#XRPCommunity #SECGov v. #ripple #XRP BREAKING: The SEC has filed its response memorandum in further support of its motion to confirm the interim appeal. https://t.co/KE1MzYKbVD
– James K. Filan (@FilanLaw) September 8, 2023
According to a Sept. 8 filing, the SEC asked the U.S. District Court for the Southern District of New York to grant her request for an interim appeal and “stay further proceedings pending the resolution of this appeal.”
“The SEC is now respectfully seeking certification for the Appellate Review because the issues raised in the Court’s Summary Judgment Order (DE 874) (“Order”) represent precisely the type of “difficult legal issues” that prompted Congress to do so to provide for an interim review.”
Judge Analisa Torres ruled in July that XRP is generally not a security under SEC guidelines, particularly when distributed through programmatic sales (e.g., sold to retailers through exchanges).
In the most recent filing, the SEC argued that the rulings on programmatic sales and other distributions raise “legal issues” so significant that the agency’s injunctive relief must be approved by the court.
The SEC indicated that this was because there is a legal gray area as to whether or not certain crypto assets fall under the classification of investment treaties via the Howey test, citing court cases from other cases.
“At least two opinions in this district come to conflicting legal conclusions on these issues, and many other courts are considering whether similar offers and sales occur.” […] satisfy Howey,” the SEC stated, adding:
“While the injunctive relief should be the exception and not the rule, this is the unusual case in which the defendants themselves say the matters are of industry concern and momentum, and so it is Type of case referred to by the Second Circuit has called for an injunction.”
These views contradict previous statements from the agency and its chairman, Gary Gensler.
Gensler has repeatedly denied the need for new crypto regulation, claiming that the SEC already has clear guidelines that adequately cover the full scope of the crypto market.
Such a view includes the idea that most cryptocurrencies on the market fall under the definition of a security.
Related: Here’s what happened in cryptocurrency today
In a Sept. 8 tweet, Ripple’s Chief Legal Officer, Stuart Alderoty, called the filing “hypocritical,” stating, “After years of its chairman saying the rules are clear and must be followed, the SEC is now shouting that urgent.” must be appealed. “Solve these ‘tricky legal issues’.”
Another SEC filing, another hypocritical pivot…
After years of its chairman saying that “the rules are clear and must be followed,” the SEC is now clamoring that an appeal is urgently needed to resolve these “thorny legal issues.” https://t.co/ige4neIWRD
— Stuart Alderoty (@s_alderoty) September 8, 2023
Paul Grewal, Coinbase’s chief legal officer, did too questioned How crypto companies can be “fairly informed” when tricky legal issues need to be resolved in court.
The SEC initially appealed in August, staying Torres’ decision on the grounds that there was “significant cause for disagreement.”
On September 1, Ripple Labs hit back by filing a memorandum of law as an objection, arguing that the SEC had baseless grounds to appeal.
Magazine: Crypto Regulation – Does SEC Chairman Gary Gensler have the final say?