The U.S. Securities and Exchange Commission (SEC) is urging the court to allow an appeal in the Ripple Labs lawsuit, citing complex legal issues surrounding the classification of XRP as a security.
SEC's Request for Appeal
The SEC has submitted a filing requesting an interlocutory appeal in the Ripple Labs lawsuit. This move comes after a ruling in July concluded that XRP was generally not a security under SEC guidelines, particularly when distributed via programmatic sales, such as retail sales through exchanges.
#XRPCommunity #SECGov v. #Ripple #XRP BREAKING: The SEC has filed its Reply Memorandum in Further Support of its Motion to Certify Interlocutory Appeal.https://t.co/KE1MzYKbVD
— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) September 8, 2023
Complex Legal Questions
In its filing, the SEC argued that the legal questions arising from the court's rulings on programmatic sales and other distributions of XRP are significant and warrant an interlocutory appeal. The agency pointed out that there is a legal gray area regarding whether certain cryptocurrencies should be classified as investment contracts under the Howey Test.
The SEC noted that within the same district, there are contradictory legal conclusions on these issues, and many other courts are grappling with similar questions related to the Howey Test.
Contradictory Statements
This request for an appeal appears to contrast with previous statements made by SEC Chairman Gary Gensler, who has emphasized that the SEC's existing guidelines are sufficient to cover the cryptocurrency market. Gensler has consistently maintained that most cryptocurrencies could be classified as securities.
Ripple's Response
Ripple Labs responded to the SEC's request by calling it "hypocritical." The company pointed out that the SEC's chairman had previously emphasized the clarity of the existing rules and the need to follow them. Ripple's Chief Legal Officer also questioned how crypto firms can be expected to operate with clarity if there are unresolved legal questions.
Another SEC filing, another hypocritical pivot…
— Stuart Alderoty (@s_alderoty) September 8, 2023
After years of its chairman saying the “rules are clear and must be obeyed” the SEC now cries that an appeal is urgently needed to resolve these “knotty legal problems." https://t.co/ige4neIWRD
The SEC's legal action against Ripple Labs has been closely watched as it has significant implications for the regulatory status of cryptocurrencies. The lawsuit centers on whether XRP should be classified as a security and subject to SEC regulations. The outcome of the case could have far-reaching consequences for the broader cryptocurrency industry.
