In another twist in the long-lasting legal fight between the United States Securities and Exchange Commission (SEC) and Ripple Labs over whether XRP is a security and whether Ripple sold it wrongfully as one, the SEC has taken another significant step. After Judge Analisa Torres ruled on July 13th partly that XRP was a security when sold to institutional investors, granting the SEC’s motion and denying its motion as to programmatic XRP sales, the SEC filed a motion to file an interlocutory appeal.
“Interlocutory review is warranted here. These two issues involve controlling questions of law on which there is substantial ground for differences of opinion as reflected by an intra-district split that has already developed,” the SEC argued.
Simply put, a “motion for leave to file an interlocutory appeal” is a formal request by one party in a legal case to ask a higher court for permission to appeal a specific decision or ruling made by a lower court before the entire case concludes. Commentators like John E. Deaton, a lawyer himself, have said that while not impossible, it would be highly unlikely that the SEC was to file this motion and even less likely that the Judge was to grant it.
Although an appeal is expected to be lodged after the case concludes, it is not uncommon to have an interlocutory appeal if the question at hand is substantial, which is now for Judge Torres to decide. The case still has a pending jury trial, which Judge Torres set for 2024. The Jury will decide about the charges brought against Ripple CEO Brad Garlinghouse and Chairman Chris Larsen, claiming they “aided and abetted” in the institutional sales of billions of dollars in XRP.
XRP a Security?
It must be noted that the filing does not dispute that XRP itself is a security but rather the question of programmatic and individual sales. Early commentators on Twitter claimed that the SEC appeal could make XRP sales on exchanges securities; however, this is not the case. As Bill Morgan, an Australian lawyer and close observer of the case said, Judge “Torres’s decision was not just that she found XRP itself was not a security but that she referred to the SEC v Telegram case (amongst others) and found digital assets such as the gram token are commodities”.
In addition, it must be said that the Judge’s ruling and the SEC’s appeal are centred around the specific allegations against Ripple, its executives, and their sales of XRP, not those on exchanges.
The SEC also asked Judge Torres for all other parts of her judgment not to be enforced until an appeal has been decided in the Second Circuit. As James K. Filan, a prominent lawyer, said, this would be unlikely for Torres to agree to; in his words, “that would be an epic battle between the parties, and whether the court agrees to that remains to be seen.”
The price of XRP is slightly down 3.51% in the past 24 hours and fell 6% from last week, and now stands at $0.63, according to CoinMarketCap.