The US
Securities and Exchange Commission (SEC) has crossed the first step in its effort to
appeal a trial court’s ruling that crypto firm Ripple’s XRP token sale on digital asset exchanges is not a
security offering. Judge Analisa Torres has granted the securities
watchdog’s request to file a motion that will enable it to further argue for
permission to put forward an interlocutory appeal in the case, CoinDesk
reported today (Thursday).
An
interlocutory appeal involves challenging a decision made by a lower court
before the case concludes. Not all such appeals are permitted, and the
appealing party must demonstrate that the decision could greatly influence the
case’s final outcome.
According
to CoinDesk, the SEC must file the permitted
motion by August 18th (tomorrow) and Ripple will have until September 1st to respond. Subsequently, the SEC can provide a counter-argument by September 8th.
In a ruling delivered mid-last month, the court concluded, in what the crypto industry considered a “partial
victory” for Ripple, that the crypto firm’s sale of XRP only violates federal
securities law when sold to sophisticated investors. However, the SEC in a
recent court filing disclosed that it was seeking permission to file a motion
that will move it a step close towards getting approval to appeal the
case.
“Specifically,
the SEC seeks to certify the court’s holding that Defendants’ ‘programmatic’
offers and sales to XRP buyers over crypto asset trading platforms and Ripple’s
‘other distributions’ in exchange for labour and services did not involve the
offer or sale of securities under [the Howey Test],” the SEC elaborated in the
filing.
The Howey
Test is a technique used to determine when a financial transaction qualifies as
an ‘investment contract’ and should be regulated as a security dealing.
Is the Appeal Approval Feasible?
In stating
its interest in appealing the case, the SEC argued that the case deserved an “interlocutory review”
because the issues the agency raised “involve controlling questions of law on
which there is substantial ground for different of opinions…”
“Timely
appellate review is particularly warranted given the number of actions
currently pending that may be affected by how the Court of Appeals resolves
these issues,” SEC…
