- Ripple Labs challenges the SEC’s early appeal of a court decision made on July 13.
- The Howey test’s standards, central to the disagreement, determine if transactions are securities.
- Ripple previously faced a partial victory against the SEC concerning the classification of XRP.
Ripple Labs is not mincing words over its disagreement with the Securities and Exchange Commission (SEC). Their contention arises from the SEC’s recent move to appeal a decision handed down by U.S. District Court Judge Analisa Torres. Ripple’s legal professionals voiced their concerns in a letter sent on August 16 to Judge Torres, located in the Southern District of New York.
Ripple’s primary contention is that the SEC’s decision to appeal is both hasty and not based on the concrete standards of the Howey test. This test serves as a yardstick to ascertain if a transaction is categorized as a security. Ripple’s legal team stands firm that the distribution specifics of their cryptocurrency, XRP, don’t align with the said criteria.
Offering a bit of background, an interlocutory appeal gives involved parties an avenue to challenge a court’s ruling while other segments of the lawsuit persist. The thing to note is that such appeals aren’t the norm, coming with tight guidelines.
Ripple’s legal representatives, refuting the SEC’s recent action, put forth three essential arguments:
They firstly point out that a genuine appeal must hinge on a definite legal matter. They opine that the SEC’s current approach doesn’t unveil any new legal issues worth scrutiny.
Furthermore, they rebuff the SEC’s assertion that the initial court ruling was in error. For the SEC’s perspective to have weight, there should be a visible conflict between two court rulings on an identical topic. Ripple’s lawyers underline the fact that no such conflict exists in this scenario.
Lastly, they opine that green-lighting an instantaneous appeal wouldn’t necessarily speed up the litigation process in motion. Ripple’s chief legal expert, Stuart Alderoty, remarked that there aren’t any unusual situations present, urging the court to deviate from standard legal avenues.
On its recent battle, Ripple encountered a slight edge over the SEC earlier on July 13. At that time, Judge Torres stated that the XRP cryptocurrency doesn’t inherently qualify as a security. Yet, there might be specific situations where XRP transactions get that label. For example, XRP transactions involving major financial players could be deemed securities, but those with regular consumers on public platforms might be exempt.
Recap of the 2020 XRP Lawsuit
In 2020, the SEC filed a lawsuit against Ripple Labs. The core of the dispute revolves around the SEC’s allegation that Ripple engaged in an unregistered securities offering by selling XRP, which they consider a security rather than a simple cryptocurrency. Ripple Labs pushed back against these claims, asserting that XRP operates as a currency and should not be classified under the same regulatory umbrella as traditional securities.
The legal battle brought significant implications in the cryptocurrency market for the past three years. Ripple’s leaders continue to emphasize their commitment to working with authorities and ensuring transparency in their operations.
