Ripple, the company behind the XRP cryptocurrency, has filed a response to the U.S. Securities and Exchange Commission (SEC) regarding its appeal request in the ongoing lawsuit over XRP’s status as a security. Ripple’s legal team argues that the SEC’s grounds for an appeal are based on dissatisfaction and lack of exceptional circumstances.
SEC Seeks to Overturn Court’s Decision on XRP
The SEC filed a lawsuit against Ripple, its CEO Brad Garlinghouse, and co-founder Chris Larsen in December 2020, alleging that they had conducted an unregistered securities offering of XRP worth more than $1.3 billion. Ripple denies the allegations and claims that XRP is a digital asset, not a security.
In July 2021, U.S. District Judge Analisa Torres ruled that XRP largely did not qualify as a security under SEC guidelines for sales to retail investors. The judge also granted Ripple access to some of the SEC’s internal documents regarding its views on other cryptocurrencies such as Bitcoin and Ethereum.
The SEC was dissatisfied with the court’s decision and moved to appeal and stay it in August 2021. The SEC argued that there was “substantial ground for differences of opinion” on the laws at issue and that an appeal would “materially advance the ultimate termination of the litigation.”
Ripple Opposes SEC’s Appeal Request
Ripple’s legal representatives have responded to the SEC’s appeal request in a filing on Sept. 1, 2021. They contend that the SEC has not met the requirements for an interlocutory appeal, which is an appeal of a ruling before a trial is concluded.
According to Ripple’s lawyers, the SEC’s grounds for an appeal are primarily rooted in dissatisfaction with the judge’s decision and do not show any exceptional circumstances that would justify an appeal. They also claim that an appeal would not materially advance the ultimate termination of the litigation, but rather delay it.
Ripple’s legal team calls on the judge to deny any request for an appeal or stay and proceed with the discovery process. They also point out that the SEC has not attempted to meet the standard for a stay, even after Ripple highlighted that omission in their pre-motion letter.
Implications of the Lawsuit for XRP and Crypto Industry
The lawsuit between the SEC and Ripple has significant implications for XRP and the crypto industry at large. The outcome of the case could determine whether XRP is a security or not, which would affect its legal status, market value, and availability on crypto platforms.
Following the SEC’s lawsuit, many crypto exchanges delisted or suspended trading of XRP to avoid potential legal repercussions. Some of them have since relisted or expressed interest in relisting XRP after the court’s favorable ruling for Ripple in July 2021.
The lawsuit also raises questions about the SEC’s regulatory approach to cryptocurrencies and its consistency in applying securities laws to different digital assets. The SEC has previously stated that Bitcoin and Ethereum are not securities, but has not provided clear guidance on how it determines the status of other cryptocurrencies.
The civil lawsuit between the SEC and Ripple is ongoing. The judge has proposed a jury trial for the case starting in the second quarter of 2024.