• The SEC has filed a motion to appeal a federal court ruling from last month that claimed secondary sales of Ripple’s XRP token are not securities.
• The agency argued that there are still “substantial grounds for difference of opinion” regarding how securities laws apply to crypto.
• A similar case involving Terraform Labs, where the judge ruled differently, was referenced by the agency as evidence of this difference in opinion.
SEC Requests Permission To Appeal Ripple Ruling
The U.S. Securities and Exchange Commission (SEC) has filed a motion requesting permission to appeal a federal court ruling last month claiming that secondary sales of Ripple’s XRP token are not securities. The agency argued that there are still “substantial grounds for difference of opinion” regarding how securities laws apply to crypto, making frequent reference to a similar case involving Terraform Labs where the judge ruled differently.
Ripple Case Not Over?
The motion, filed on Friday, contested two of Judge Analisa Torres’s rulings last month: one that “Programmatic Sales” of XRP (ex. secondary market sales) did not satisfy Howey, and another that “Other Distributions” (ex. Payments for services) also failed to do so. “There are significant grounds for difference of opinion on the correctness of both rulings,“ wrote the agency.“Since this Court’s decision, another court in this district explicitly disagreed with the Order’s ruling on the Programmatic Sales.“
Terraform Lab’s Motion Rejected
Shortly after the Ripple ruling, Terraform Labs attempted to capitalize with a motion to dismiss a similar SEC case against the firm, alleging securities fraud for failing to register its now failed TerraUSD (UST) stablecoin. District Judge Jed Rakoff rejected the group’s reasoning, however, refusing to distinguish “instantaneous sales or transfers [of cryptocurrency] from conventional trading activities.“
Judge Torres’s Opinion
In response Judge Torres said her analysis differs from Judge Rakoff because she determined that programmatic sales and other distributions fail under Howey „as they lack any investment purpose“. She added „Even if some investors may have purchased XRP hoping its value would appreciate over time — as investors may do when purchasing many types of assets — such gains were entirely dependent upon Ripple continuing its business…and were thus inseparable from Ripple’s enterprise.“
It remains unclear whether or not an appeal will be granted by Judge Torres at this time as she has yet ruled on it; however if approved it could potentially significantly stretch out the duration and scope of this lawsuit between Ripple and SEC which started back in December 2020 when charges were first brought against them by the regulatory body alleging illegal sale and distribution of unregistered security tokens worth $1 billion USD through their currency XRP