TLDR points:

  • The SEC has been granted permission to file an interlocutory appeal in the Ripple case.

  • The appeal could challenge the previous rulings that favored Ripple and its executives.

  • Ripple’s CEO and CLO have reaffirmed their belief that XRP is not a security and opposed the SEC’s appeal.

Article:

The legal battle between Ripple Labs and the US Securities and Exchange Commission (SEC) has taken a new turn, as Judge Torres has allowed the SEC to file an interlocutory appeal. This means that the SEC can present its arguments to the Second Circuit and try to overturn some of the previous decisions that went in favor of Ripple and its co-founders.

The decision was based on the letters that the parties submitted on August 9 and 16, 2023. The SEC had requested the interlocutory appeal after Judge Rakoff ruled that the SEC had failed to show that Ripple’s co-founders, Brad Garlinghouse and Chris Larsen, acted recklessly in selling XRP tokens. The SEC also wanted to appeal Judge Torres’s application of the Howey test, which determines whether an asset is a security or not.

However, Judge Torres’s decision does not mean that the appeal will be granted. The SEC still has to convince the appellate court that there are extraordinary circumstances that justify an interlocutory appeal, which is usually reserved for exceptional cases. The SEC has until August 18 to file its motion, while Ripple and its co-founders have until September 1 to file their opposition papers.

Ripple’s CEO and CLO have responded to the SEC’s request for an interlocutory appeal on social media. Garlinghouse reiterated that XRP is not a security and that this fact is not up for debate or trial. He also called the SEC’s claim that he and Larsen acted recklessly “utter nonsense” and said that he looks forward to refuting their allegations. Alderoty argued that there are no extraordinary circumstances that warrant an interlocutory appeal and that the case should proceed as usual.

John Deaton, a lawyer who supports XRP holders, commented on the development. He said that the SEC’s appeal could lead to a fierce legal battle between the parties and that the outcome could have significant implications for the crypto industry.