Ripple Labs Bites Back Against SEC's Request to File Appeal

Ripple Labs Bites Back Against SEC’s Request to File Appeal

Updated: 17 August 2023

Disclosure

Don’t invest unless prepared to lose all the money you invest. This is a high-risk investment, you shouldn’t expect to be protected if something goes wrong.

Join Our Telegram channel to stay up to date on breaking news coverage

Ripple Labs strongly objected to the SEC’s request for an interlocutory appeal, arguing that there haven’t been any exceptional circumstances that would make such an appeal necessary.

This stance follows a court ruling in July that declared the sale of XRP to retail investors as not falling under the category of securities.

Ripple’s Lawyers Suggest SEC to Appeal After Final Judgment

On August 9, the Securities and Exchange Commission (SEC) communicated its stance through a letter to Judge Analisa Torres, the presiding judge overseeing the ongoing case. In this letter, the SEC asserted that it deemed her prior decision worthy of review by an appellate court. This development followed a significant ruling by Judge Torres on July 13, wherein she determined that Ripple Labs Inc had not violated federal securities law by facilitating the sale of its XRP token on public exchanges.

In response to the SEC’s move, Ripple Labs took proactive measures by submitting a letter to the Southern District of New York. The essence of Ripple’s communication lay in its objection to the SEC’s position. The cryptocurrency company argued that the Securities and Exchange Commission had fallen short in fulfilling the necessary elements of the Howey test, a vital criterion pertinent to evaluating Ripple’s distribution of the XRP token. This intricate aspect, characterised as a “legal question,” forms the crux of Ripple’s protest.

Ripple strongly advocated that the court decline the SEC’s plea for leave to initiate an interlocutory appeal. This exchange of legal volleys underscores the complex and evolving nature of the regulatory landscape surrounding digital assets.

But What is an Interlocutory Appeal?

An interlocutory appeal, often referred to as an interim appeal, is a legal procedure within the realm of civil procedure in the United States. It involves appealing a decision made by a trial court while other elements of the case are still ongoing. These appeals are exceptional and are only permitted under specific circumstances as determined by federal and individual state courts. Their occurrence is usually rare, contingent upon the case’s status.

In this instance, the Securities and Exchange Commission (SEC) is pursuing an interlocutory appeal, seeking to challenge a recent favourable ruling in favour of Ripple. However, this appeal is being pursued before the final decision in the case has been issued. This is why Ripple’s legal team has decided to contest this appeal, maintaining their opposition to the SEC’s attempt to overturn the prior ruling.

Ripple Lawyers Put Forth 3 Major Arguments in the Letter

https://t.co/lDm5w0EL2p

— Eleanor Terrett (@EleanorTerrett) August 16, 2023

As part of their argument, Ripple’s legal team emphasized three critical factors aimed at dissuading the court from granting the SEC’s appeal request.

Firstly, they highlighted that for an appeal to be valid, it must pertain to a purely legal question, and the SEC’s appeal does not introduce any novel legal matters necessitating review. Secondly, the lawyers countered the SEC’s assertion that the court’s prior ruling was erroneous. They pointed out that the SEC is required to demonstrate a clear conflict between two separate courts regarding the core issues, which, in this case, has not occurred.

Lastly, the third point raised by Ripple’s legal team is that the proposed appeal would not contribute to expediting the proceedings or arriving at a swifter resolution. The contention is that granting the appeal would not lead to a quicker conclusion of the case. Collectively, these three factors form Ripple’s basis for opposing the SEC’s appeal and underscore their stance on the matter.

XRP Supporters Show Support on Social Media

We oppose the SEC’s request for an interlocutory appeal. There is no extraordinary circumstance here that would justify departing from the rule requiring all issues as to all parties to be resolved before an appeal. https://t.co/hjNIwEZkSt

— Stuart Alderoty (@s_alderoty) August 16, 2023

Stuart Alderoty, Ripple’s Chief Legal Officer, shared the court’s letter, asserting the absence of exceptional circumstances warranting deviation from the rule mandating resolution of all issues involving all parties prior to an appeal. This viewpoint garnered support from numerous cryptocurrency investors, who retweeted his post to express their agreement.