Ripple and SEC’s Legal Disagreement Regarding Appeal

Updated: 21 August 2023

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David Schwartz, the Chief Technology Officer at Ripple Labs and one of the original architects of the XRP ledger, turned to X (previously known as Twitter) to explain behind the United States Securities and Exchange Commission’s (SEC) appeal.

Yes. A party that loses on any claim or issue in their suit is entitled to appeal any adverse rulings at the conclusion of the suit. The SEC is asking for permission to appeal here because the suit is not complete yet for any party.

You can see why there would be a rule like…
— David "JoelKatz" Schwartz (@JoelKatz) August 18, 2023

“A party that loses on any claim or issue in their suit is entitled to appeal any adverse rulings at the conclusion of the suit. The SEC is asking for permission to appeal here because the suit is not complete yet for any party“, Schwartz wrote.

According to Schwartz, it is typical for a court case to have a lot of little rulings, and appeals for them usually take about a year to get settled. There is a rule that all these small appeals are to be made after the conclusion of the main case and not as it happened.

If the “losing” side makes the appeals amidst the main case, it would be detrimental to the main point, as the legal proceedings would get extended every time a party appealed.

“You’d either have to pause the original case for a year every time a party appealed, making it take forever, or you’d have lots of overlapping appeals both sides would have to deal with as the actual case is still going,” Schwartz explained on X’s post.

He explains that the SEC is requesting an appeal at this point because the main case has not been concluded yet. The parties involved can appeal once the main issue is completed. This rule is in place to speed up the legal proceeding and save time and resources.

According to Schwartz, a standard rule is that both parties should appeal to adverse rulings after the case concludes. This will offer the advantage of all appeals being combined and handled simultaneously. This will improve the efficiency of the case and not waste the court’s precious time.

“But there is an exception for unusual cases, and the SEC is arguing that this is one of those unusual cases where an exception should be made, and the regular proceedings should stop until the appeal is complete,” Schwartz added.

Ripple argues that there should be no exception and that the SEC should appeal after the case concludes. It also adds that even if the SEC is allowed to appeal by the court, the leading case should continue in parallel. Thus, saving everyone’s time and effort.