As blockchain company Ripple still awaits the final judgment in its legal standoff against the United States Securities and Exchange Commission (SEC), the regulator has announced its intention to submit an ‘interlocutory appeal,’ sparking debate on what this means for the case.
Specifically, the SEC has filed a “letter outlining its basis for filing a motion for leave to file an interlocutory appeal regarding ‘programmatic’ offers and sales to XRP buyers over trading platforms and Ripple’s ‘other distributions,’” as shared by defense attorney James K. Filan on August 9.
As Filan further explained, it is not a surprise that the SEC is seeking a stay of all proceedings pending appeal, and he shared his X (formerly Twitter) post dating back to December 2022, in which he had voiced the exact same expectation.
The SEC will ask to stay the judgment pending it’s appeal to the Second Circuit. That means it will ask the court not to enforce the judgment until the appeal is over. That would be an epic battle between the parties and whether the court agrees to that remains to be seen.
— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) December 21, 2022
Meanwhile, lawyer John E. Deaton explained that this was only a pre-motion letter, “asking the judge’s permission to file a formal motion asking for her to allow the SEC to then ask the 2nd Circuit Court of Appeals to accept an early appeal.”
“It’s just like when I filed a pre-motion letter asking permission to file a motion to intervene. Granting the pre-motion letter does NOT mean she will grant the underlying motion (as in my case).”
Appeal-proof reasoning
Furthermore, Deaton added that he expected Judge Analisa Torres to grant this motion because it would then “allow her to even more fully explain her reasoning and to also further make it ‘appeal-proof’” and “allow her an opportunity to address anything Rakoff said.”
As a reminder, District Judge Jed Rakoff of the SDNY recently allowed the SEC to go forward with its case against Terraform Labs and founder Do Kwon, rejecting Judge Torres’s reasoning and distinction between public and institutional token sales in the Ripple case.
Deaton also argues that the “critics of the Torres decision seem to ignore her statement that ‘of course, some programmatic buyers may have purchased XRP with the expectations of profits to be derived from Ripple’s efforts’” but that “there just wasn’t enough credible evidence presented by the SEC. “
Questionable decision
On top of that, legal expert Jeremy Hogan retweeted Filan’s post and referred to the SEC’s decision to file an interlocutory appeal as questionable, pointing out that the regulator was not “appealing whether XRP itself is a security – just its losses on the programmatic and individual sales issues.”
In the meantime, attorney Stuart Alderoty said that the SEC did not have the ‘right’ to appeal just yet, “which is why they are asking permission to file an ‘interlocutory’ appeal,” announcing that “Ripple will file its response with the Court next week,” as he explained in a post shared on August 10.
Interestingly, lawyer Bill Morgan highlighted a “subtle but significant change” in the SEC’s language evident in a settlement with crypto exchange Bittrex and its co-founder and CEO William Shihara, in which it no longer uses “selling digital asset securities” but “crypto assets offered and sold as securities,” in a post on August 11.
As things stand, the XRP token that is at the center of the ongoing legal saga was at press time trading at $0.631, recording an increase of 0.65% on the day, declining 4.15% across the previous week but still gaining 32.65% on its monthly chart.
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