On August 16, Ripple Labs Inc submitted a filing opposing the US SEC’s expected interlocutory appeal related to the summary judgment granted by US District Court Judge Annalisa Torres on July 13.
The financial regulator accused Ripple and two of its executives (Christian Larsen and Bradley Garlinghouse) in December 2020 of violating securities laws by selling XRP tokens. On July 13, 2023, Ripple partially won over the securities regulator regarding XRP’s securities status.
Judge Torres ruled that the XRP token was not a security when sold on digital asset exchanges. However, she said Ripple’s institutional XRP sales were considered securities. It seems the regulator is not happy with the court ruling.
The SEC submitted a court filing on August 9, laying out the basis for an interlocutory appeal that would oppose the ruling in favor of Ripple. However, Ripple’s recent submission intends to prevent such an event.
Ripple Responded Strongly
Ripple’s lawyers said the SEC failed to satisfy the Howey test elements related to the company’s distribution of XRP. The court must deny the regulator’s motion for leave to file an interlocutory appeal. The Howey test is a legal test used in the US to determine whether an investment should be considered a security.
Brad Garlinghouse, Ripple’s CEO, stated that the request for appeal does not alter the fact that XRP is not a security.
“That’s not up for debate/trial. But the SEC continues to claim that Chris [Ripple co-founder Chris Larsen] and I acted recklessly in believing that XRP is not a security. That’s utter nonsense.”
Ripple’s attorneys gave three main reasons for opposing the SEC’s request. First, they stated that an appeal should be based on a clear legal question. However, the SEC’s request did not present any legal issues requiring investigation.
Secondly, the attorneys said the SEC’s argument that the court misjudged the issue. The SEC needs to demonstrate that two courts strongly disagree with each other on the same issues, which is not the case here.
Thirdly, they argued that the instant appeal would not advance the dismissal proceedings. Garlinghouse said the company is ready to show that the SEC is wrong again on the facts and the law.
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