Unexpected SEC Action: XRP Not a Security, But Legal Battle Continues

  • In its proceedings against Ripple and Terrform Labs, the U.S. SEC claimed it was not challenging whether the underlying assets were inherently securities.
  • The regulator claimed that the outcome of the Ripple case would have an impact on its other legal disputes, hence it was necessary to appeal.
  • Due to the recent market conditions, XRP’s price fell more than 20% during the past week, reverting to $0.50 levels.

In its lawsuit against Ripple and Terraform Labs, the U.S. Securities and Exchange Commission (SEC) acknowledged that the underlying assets did not necessarily qualify as securities.

However, because it can have an impact on its other legal battles, it plans to appeal the judge’s decision in its case against Ripple, a cryptocurrency payment company.

The regulator stated in its move for interlocutory appeal that its main issue all along wasn’t whether the XRP coin was a security in and of itself.

Interlocutory Appeal Motion

The complaint states:

“The SEC did not argue here or in Terraform that the asset underlying those investment contracts were necessarily a security (and the SEC does not seek appellate review of any holding relating to the fact that the underlying assets here are nothing but computer code with no inherent value).”

The SEC insists that the court certify an order for an interlocutory appeal even though it does not contest the legality of cryptocurrencies and claims that it satisfies all of the prerequisites for such an appeal.

The regulator claims that crucial legal issues are at stake in the court decision in the Ripple case. It was mentioned that the ruling might have an impact on many other SEC lawsuits, such as the ones against Coinbase and Binance.

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Additionally, it stated that there was a strong basis for disagreement among the parties and specifically used the ruling in the Terraform Labs case to support its claim. The SEC thinks that other impartial courts might reach a different conclusion regarding the legality of programmatic sales and other distributions.

The SEC made this point in its third justification for why an order of interlocutory appeal should be approved. A future appeal would only be delayed if it weren’t filed now until after the verdict.

CryptoCaster Quick Check:

In the interim, SEC is also requesting a stay of remedies and any pretrial proceedings while the appeal is being decided. The motion is subject to a response from Ripple by September 1.

XRP Price Action

The SEC admission has drawn more attention from the XRP community than the chance for an appeal. Cryptocurrency attorney John Deaton claimed that because their amicus brief requested that the judge include that in the judgement, the asset holders were to blame for the regulator’s acquiescence.CRYPTOCASTER® - DECENTRALIZED FREEDOM!

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