A recent pivotal court decision regarding the classification of $XRP as a security has spurred the U.S. Securities and Exchange Commission (SEC) into action. The regulatory body announced its intent to appeal the ruling, signaling a new chapter in the ongoing legal saga surrounding Ripple's cryptocurrency.
In a bold move, the SEC has taken steps to challenge a recent court decision that dismissed XRP's immediate categorization as a security. Through a court filing, the SEC expressed its desire to obtain certification for the court's ruling, which deemed certain transactions involving XRP not to fall under the scope of securities offerings. Termed "programmatic" sales and other distributions, these actions have raised questions about their classification.
The SEC's decision to pursue an interlocutory appeal stems from its conviction that a comprehensive review is necessary to clarify the ramifications of the court's decision. The outcome of this appeal could potentially impact various ongoing actions carried out by the SEC.
Following the regulatory maneuver, the price of XRP exhibited a minor decline, settling around $-.63 after the filing, as reported by Coingecko. Despite this slight dip, XRP's overall performance remained robust, boasting a 33% increase over the past month.
This development unfolds in the wake of prior judgment by Judge Analisa Torres, who ruled the specific XRP sales by Ripple Labs to the public and its distributions to employees did not transgress into the territory of unregistered securities. Nonetheless, the ruling did acknowledge that sales of XRP to institutions did constitute an offering of unregistered securities.
Jeremy Hogan, Partner at Hogan & Hogan, emphasized that the SEC's appeal will not question XRP's classification as a security, but will rather scrutinize the agency's handling of programmatic and individual sales. This distinction shed light on the intricate nuances of the ongoing legal deliberations.
The SEC's recent court filing serves as an avenue to seek a deviation from the established course of the case, effectively seeking permission to proceed along this new trajectory. Notably, Judge Torres scheduled the trial for the spring of 2024, underlining the prolonged nature of this legal tussle.
This legal tussle marks yet another chapter in Ripple's protracted battle with the SEC, which began with the agency's lawsuit against the company in 2020. The SEC's allegations centered on claims that Ripple, along with its co-founders Brad Garlinghouse and Chris Larsen, raised $1.3 billion through the sale of XRP, a cryptocurrency that the agency considered an unregistered security.
While the SEC's appeal might not be an immediate setback for Ripple, interpretations of the ongoing legal situation remain multifaceted. John Deaton, Founder of Crypto Law, highlighted that the gears of justice turn gradually, and the existing court ruling remains the prevailing law for the time being. Furthermore, Deaton indicated that other legal arguments exist that challenge the classification of XRP as a security under the Howey Test.
The SEC highlighted internal disagreement within the Southern District of New York, specifically referencing Judge Jed Rakoff's divergence from Judge Torres' reasoning in another case. This internal divergence underscores the complexity of the legal landscape and serves as part of the rationale for the SEC's interlocutory appeal.
As the SEC forges ahead with its appeal, the legal landscape for Ripple and XRP remains intricate and multifaceted. The ongoing battle, marked by regulatory and judicial dynamics, signifies a significant juncture for the cryptocurrency industry, potentially influencing how cryptocurrencies are classified and regulated in the United States.
