Ripple Opposes SEC Appeal of Ruling That Crypto Isn’t a Security
(Bloomberg) — Ripple Labs objected to the Securities and Exchange Commission’s request to appeal a federal judge’s ruling that cryptocurrency wasn’t a security when sold to the public.
Ripple on Friday asked US District Judge Analisa Torres in New York to deny the SEC’s request. The company said the agency is “rushing to appeal” what it claims is a legal question that applies to every case involving digital assets while “the factual and legal procedural postures of other SEC enforcement actions are different.”
The SEC needs Torres’s permission to appeal her ruling because it wasn’t a final judgment. The regulator is also seeking to put on hold its suit against Ripple for allegedly offering unregistered securities while the appeal is pending.
Torres’s ruling was widely hailed as a victory for the crypto industry, which has resisted attempts to categorize digital assets as securities subject to regulation. In her July 13 decision, Torres drew a distinction between sales of Ripple’s XRP token to institutional investors, which she said met the test for an investment contract under federal securities law, and sales to the public on exchanges.
The SEC said the matter was ripe for immediate review because the ultimate outcome could affect other cases involving cryptocurrency, including similar suits the regulator has brought against Coinbase Global Inc. and Binance Holdings Ltd.
The SEC noted that another Manhattan federal judge, Jed Rakoff, explicitly rejected Torres’s approach in the SEC’s case against Terraform Labs and its founder Do Kwon, finding that the Terra USD token may indeed be a security when sold to retail investors.
Ripple said in its Friday filing that there are important issues that remain open before the case is completed, such as whether its sales of XRP to institutional investors are outside the agency’s jurisdiction. If the SEC is allowed such an extraordinary appeal, Ripple said, it will seek to challenge the judge’s finding that those sales were securities transactions.
Ripple’s filing comes just days after the cryptocurrency industry scored a major legal victory in another case when an appeals court in Washington overturned the SEC’s decision to block Grayscale Investments LLC’s proposed spot Bitcoin exchange-traded fund.
Ripple Chief Executive Officer Brad Garlinghouse and Chairman Christian Larsen, who are also defendants, have also opposed the SEC’s request, saying that Torres was “entirely right” and that public interest in the case favors moving ahead to trial.
The case is SEC v. Ripple Labs Inc., 20-cv-10832, US District Court, Southern District of New York (Manhattan).