Ripple Pushes Back Against SEC's Bid to Appeal Crypto Security Ruling
In a recent development, Ripple Labs has firmly objected to the Securities and Exchange Commission's (SEC) request to appeal a federal judge's ruling that classified cryptocurrency as not being a security when sold to the public. This ongoing legal battle has significant implications for the crypto industry's regulatory landscape.
The SEC had sought to appeal a ruling made by US District Judge Analisa Torres in New York, which held that cryptocurrency, specifically Ripple's XRP token, did not fall under the category of securities when sold to the public. This ruling was considered a significant victory for the crypto industry, which has long resisted the SEC's attempts to regulate digital assets as securities.
Ripple's response to the SEC's request was clear: deny the appeal. The company argued that the SEC was rushing to appeal a decision that, in their view, had broader implications for the entire digital asset landscape. They contended that the factual and legal aspects of other SEC enforcement actions were distinct and should not be bundled together.
The SEC's desire to appeal stemmed from its belief that the case had far-reaching implications. They argued that the ultimate outcome could affect similar cases involving cryptocurrency, including ongoing lawsuits against industry giants like Coinbase Global Inc. and Binance Holdings Ltd. The SEC's stance was rooted in the potential precedent set by Judge Torres's ruling.
Notably, another Manhattan federal judge, Jed Rakoff, took a different stance in the SEC's case against Terraform Labs and its founder, Do Kwon. Judge Rakoff's judgment contradicted Judge Torres's, suggesting that the Terra USD token could indeed be considered a security when sold to retail investors. This divergence in judicial interpretation added complexity to the case.
Ripple pointed out that several critical issues remained unresolved as the case progressed. One of these issues was whether Ripple's sales of XRP to institutional investors fell within the SEC's jurisdiction. Ripple emphasized that if the SEC were granted the appeal, they would challenge the judge's finding that these sales constituted securities transactions.
Ripple's objection to the SEC's appeal comes in the wake of a significant legal victory for the crypto industry. An appeals court in Washington recently overturned the SEC's decision to block Grayscale Investments LLC's proposed spot Bitcoin exchange-traded fund, highlighting the ongoing legal battles within the industry.
Ripple's CEO, Brad Garlinghouse, and Chairman, Christian Larsen, who are also named defendants in the case, have firmly supported Judge Torres's ruling. They argued that the public interest in the case favored proceeding to trial and that her decision was in alignment with the industry's best interests.
The battle between Ripple Labs and the SEC over the classification of cryptocurrency as a security remains a significant point of contention within the crypto industry. Ripple's objection to the SEC's appeal underscores the complexity of the issue and the broader implications for the regulatory landscape surrounding digital assets. The outcome of this case could shape the future of cryptocurrency regulation in the United States.