The U.S. Securities and Exchange Commission (SEC) has recently presented a filing urging a court review over a decision related to Ripple Labs’ XRP token sales.
SEC Challenges Ripple Labs Decision
The SEC’s contention focuses on the ruling that declared XRP isn’t a security when offered to ordinary investors. They believe that complex legal issues, especially concerning the Howey test, merit a closer look.
On September 8th, the SEC appealed to the U.S. District Court for the Southern District of New York. Their demand? To pause current proceedings while the appeal is in consideration. They underscored the necessity by stating, “The issues raised by the Court’s order… epitomize the complex legal dilemmas prompting Congress to sanction interlocutory reviews.”
In July, Judge Analisa Torres asserted that XRP doesn’t typically qualify as a security under SEC rules. Notably, this includes XRP sales made through exchanges.
However, the SEC now emphasizes significant legal concerns surrounding crypto sales and distributions. The underlying question? Whether cryptocurrencies like XRP fall under the “investment contracts” category through the Howey test. They mentioned other cases, revealing, “Contradictory conclusions exist within this District about these concerns, with several courts deliberating if offers and sales satisfy Howey.”
The Call for Interlocutory Appeal
While appeals should remain rare, the SEC highlighted that this case holds industry-wide significance. They asserted, “It’s exactly the type of case the Second Circuit has earmarked for interlocutory appeal.”
Gary Gensler, SEC Chair, previously expressed skepticism towards new crypto regulations. He’s consistently maintained that existing SEC guidelines suffice for the broad spectrum of the crypto realm. Gensler’s viewpoint categorizes most cryptocurrencies as securities.
Stuart Alderoty, Ripple’s chief legal officer, labeled the SEC’s recent filing as “hypocritical” on Twitter. He challenged the agency’s consistency, considering past assertions about clear regulations. Likewise, Coinbase’s legal head, Paul Grewal, questioned the notion of “fair notice” amidst these intricate legal debates.
The Ripple Retort
In response to the SEC’s August appeal, Ripple Labs countered on September 1st. Their memorandum of law contested the SEC’s reasons, deeming them insufficient for an appeal request.
The SEC’s move to appeal the Ripple Labs decision underscores the evolving challenges of regulating the dynamic crypto market. With both sides firmly entrenched in their positions, the crypto community awaits the next chapter in this high-stakes legal saga.
None of the information on this website is investment or financial advice. CryptoMode is not responsible for any financial losses sustained by acting on information provided on this website.