The U.S. Securities and Exchange Commission (SEC) has disclosed its intention to initiate an “interlocutory appeal” in response to a recent court judgment concerning Ripple’s programmatic XRP sales. The new trial starts in the second quarter, around April 1st and June 30th, 2024.
On August 9th, 2023, a letter to Judge Analisa Torres, the presiding judge in the case, to the SEC said it believed her decision warrants a fresh look by an appellate court.
This appeal comes after a federal judge ruled that while Ripple’s direct sales of XRP to institutional investors violated securities law, its programmatic sales to retail investors through exchanges did not.
The Battle Between Ripple and SEC
The legal battle between Ripple Labs and the SEC began in 2020 when the agency sued Ripple and its CEO Brad Garlinghouse and executive chairman Chris Larsen for allegedly raising $1.3 billion through the sale of XRP, an alleged unregistered security. The case garnered significant attention as it could have far-reaching consequences for classifying cryptocurrencies under securities laws.
The SEC’s Preliminary Appeal Regarding XRP
In its court filing, the SEC stated that it intends to seek “leave to” appeal a specific aspect of the recent ruling while the remaining parts of the case proceed to trial. The SEC seeks to certify the court’s holding that Ripple’s programmatic offers and sales of XRP did not involve the sale of securities under the Howey test.
This is a legal test used to determine if an investment qualifies as a security. This interlocutory appeal, if approved, could potentially prevent the need for two separate trials and streamline the legal process.
Ripple’s chief legal officer Stuart Alderoty said on Twitter that the SEC doesn’t have the right to appeal. He added that Ripple will file its response next week.
XRP’s Current Stand in the Crypto Market
The current price of XRP, as of the time of writing, is $0.628485 today, with a 24-hour trading volume of $1,568,361,980.42. This represents a -2.46% price decline in the last 24 hours and a -5.45% in the past seven days, with a circulating supply of 53 Billion XRP, XRP values at a market cap of $33,201,666,474.
XRP’S Price Chart: According to Coingecko
This appeal could cause volatility in Ripple’s price until the case is heard.
The market has yet to fully realize the implications of the uncertain outcome of the SEC’s appeal. Subsequently, if the appellate court upholds the ruling, it could further solidify the position that programmatic sales of XRP are not securities. Therefore, providing more clarity for market participants. On the other hand, if the ruling overturns, it could introduce additional regulatory scrutiny. This causes uncertainty surrounding the classification of cryptos, potentially impacting investor sentiment and market dynamics.