Ripple Labs Faces SEC's Appeal Push On Controversial XRP Security Decision

In a strategic move, the Securities and Exchange Commission (SEC) on Friday moved to file for an interlocutory appeal, asking for an immediate review of a federal judge’s ruling that XRP XRP/USD isn't a security when sold to the general public.

What Happened: The SEC, in its argument, said that by opting for an interlocutory appeal rather than a traditional appeal, there is a higher likelihood for the court to "assess in one proceeding the remedies for all of the violations for which Defendants are ultimately held liable," Blockworks reported.

Lawyers representing the SEC stressed the potential significant impact of the XRP ruling on several ongoing legal proceedings, including those involving Coinbase Global Inc COIN and Binance, according to the report.

The Programmatic Sales ruling is particularly in focus, according to Blockworks, as the SEC argues it “could have significant persuasive value in various pending SEC enforcement actions where issuers offered and sold crypto assets indiscriminately to public investors over crypto asset trading platforms, including cases pending in this district.”

Judge Analisa Torres, who paved the way for the SEC to propose the motion, has not yet given the nod for the appeal. Ripple Labs, along with co-defendants CEO Brad Garlinghouse and co-founder Chris Larsen, pushed back on SEC’s rush to file an interlocutory appeal.

Read also: Pro-XRP Lawyer Says He Expected Ripple Token To Break $1 After Court Ruling: ‘Until Bitcoin Breaks Its All-Time High…’

The defense argues that the SEC hasn't substantiated the necessary "burden" to stretch the Howey test to encompass all of Ripple's XRP distributions.

The defense attorneys also accused the SEC of hastily trying to appeal, claiming the Commission sees it as a purely legal issue with implications for all digital-asset-related cases.

A pivotal focus for the SEC's appeal bid is the judge’s prior decision on programmatic sales and other XRP distributions. Blockworks highlighted that in July, Judge Torres ruled that while programmatic sales of XRP didn't entirely align with the Howey test's benchmarks, the institutional sales did.

The SEC's motion in the Manhattan federal court underscores the Commission’s effort to appeal the ruling on Ripple Labs’ XRP token, according to Bloomberg Law, emphasizing that it’s not a security when offered to the general populace.

Read next: ‘Crypto Industry Is Not Going Anywhere,’ Pompliano Predicts: Bitcoin To Come ‘Roaring Back’ In Next 18 To 24 Months

Join Benzinga’s Future of Digital Assets in New York City on Nov. 14, 2023, to stay updated on trends like AI, regulations, SEC actions and institutional adoption in the crypto space. Secure early bird discounted tickets now!

Photo: Shutterstock