Well, the hype and excitement surrounding Ripple Labs (XRP cryptocurrency creators) victory against the United States Securities and Exchange Commission last month are starting to lose steam. The victory cited as a “monumental step in regulatory clarity” may not prove to be more than a decision with no legs and no long-term bearing on the crypto space.
As reported by BeInCrypto, back on July 13th, Judge Analisa Torres of the Southern District of New York ruled that XRP was not a security when sold to the public on exchanges.
However, the judge ruled that XRP became a security when sold to institutional investors. The crypto community considered this a major win, and a judgment that may benefit other cryptocurrencies and companies facing similar legal conflicts.
In the next eighteen days following Judge Torres’ in-favor ruling for Ripple Labs, U.S. District Judge Jed Rakoff, who sits on the same court, ruled in opposition of Judge Torres’ findings in a separate, but similar matter involving another controversial crypto company, Terraform Labs (Terra Luna and stablecoin Terra USD cryptocurrency creators).
Judge Rakoff found that the SEC had a "plausible claim" that the Terra USD token offered by Terraform Labs qualified as a security when sold on public exchanges.
On Wednesday, the SEC formally
requested U.S. District Judge Analisa Torres let a federal appeals court review her July 13th decision, in which she said the sale of Ripple's XRP digital token on public exchanges complied with federal
securities laws.
The SEC said an appeal could address legal issues on which there was "substantial ground for differences of opinion."
It also stated that the outcome of an appeal had "particular consequence" for its ability to enforce securities laws, and for a "large number" of other lawsuits.
For years, the United States Securities and Exchange Commission has proclaimed that cryptocurrencies are securities, as are stocks and bonds, and professed its authority to regulate them.
On Thursday, August 17th, Judge Analisa Torres accepted the United States Securities and Exchange Commission’s (SEC) request to file a motion for leave to file an interlocutory appeal. Although, this is no guarantee. The Second Circuit would still need to review the application for an appeal.
According to court documents, the SEC should file its motion by August 18th. All defendants must file their opposition papers by September 1st, and the SEC should file its reply by September 8th.
The SEC vs. Ripple battle started in December of 2020, when the regulator insisted XRP was an unregistered security. Judge Torres’ 2023 ruling was a devastating blow to the agency, which has proclaimed jurisdiction over most crypto assets on the grounds that they are believed to be securities.
Many praised the July 2023 ruling as a game-changing victory for crypto, but if the Second Court approves the appeal, the SEC vs. Ripple battle may carry on for months to come.
Upon release of the news, the XRP price slipped by approximately 3.6% within an hour of the announcement.
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