In mid-July, a federal court settled a years-long battle between Ripple Labs and the SEC to decide if Ripple’s XRP token was a security or not. Southern District of New York judge Analisa Torres ruled that the XRP token is not a security when sold to the general public, but it could be treated as one with regard to past sales to institutional clients.
The regulator doesn’t seem to be happy with that partial victory: The SEC said in a court filing on Wednesday that it would file an “interlocutory appeal” for Torres’ ruling.
“Interlocutory review is warranted here,” the SEC said in its new filing. “These two issues involve controlling questions of law on which there is substantial ground for differences of opinion, as reflected by an intra-district split that has already developed.”
Basically, this means the SEC wants a redo on the first half of the case, and to be fair, the somewhat “split” ruling was a bit confusing initially: Torres had said that some of Ripple’s programmatic sales of XRP tokens didn’t violate securities laws because they involved a bidding process, but direct sales to institutions did fall under the ambit of securities laws.
The SEC’s move this week doesn’t come as a surprise. The regulator had complained after the ruling that the verdict was “wrongly decided” and the court “should not follow them,” and even repeated its statement in legal documents for a separate case against Terraform Labs.
But Ripple won’t shy away from the SEC’s likely appeal, Stu Alderoty, chief legal officer of Ripple Labs, told me on Chain Reaction in late July. “We think the judge got that right, and we think that was a faithful application of the law. A court of appeals will not only affirm that, but maybe even amplify that to even a greater extent.”
The SEC’s new filing needs to be approved by the US SDNY for appeal, and then by the court of appeals. Once it jumps those hurdles, the SEC would need permission from the US Court of Appeals for the Second Circuit.
The SEC and Ripple have been at it in the courts since 2020, when the agency alleged that the crypto firm raised $1.3 billion via sales of XRP, which it claimed was an unregistered security.