Ripple’s Legal Defense Pushes Back Against SEC’s XRP Appeal

Legal representatives for Ripple have contested the United States Securities and Exchange Commission’s (SEC) pursuit of an appeal, contending that the regulator hasn’t fulfilled the necessary criteria to warrant such a request.

In a filing submitted on September 1 to the U.S. District Court for the Southern District of New York, Ripple’s legal team argued that the SEC’s grounds for seeking an appeal primarily stem from its dissatisfaction with a judge’s ruling, which determined that the XRP token did not meet the criteria to be classified as a security for retail investor sales. Ripple’s lawyers asserted that the “exceptional circumstances required for interlocutory appeal” were absent in this case and urged the judge to dismiss any request for an appeal or stay.

Ripple pointed out, “The SEC has not even attempted to meet the standard for a stay, even after the Individual Defendants identified that omission in their pre-motion letter. The Individual Defendants write separately to oppose the SEC’s request. Ripple joins that opposition.”

In August, the SEC moved forward with its intention to appeal and request a stay on a July court decision delivered by Judge Analisa Torres, which largely determined that XRP did not fall under the classification of a security as defined by SEC guidelines. At the time, the SEC argued that there were “substantial grounds for differences of opinion” regarding the relevant laws.

The SEC initiated its lawsuit against Ripple, along with CEO Brad Garlinghouse and co-founder Chris Larsen, in December 2020, leading several cryptocurrency exchanges to delist the XRP token to avoid potential legal complications. Following Judge Torres’ ruling, many of these same exchanges indicated their intent to relist XRP or explore doing so in the future.

Brad Garlinghouse expressed his frustration with the situation, stating, “It’s sad that so many in the US crypto community have to resort to the legal process to prove this SEC is out of control and consistently wrong on the facts and the law” in an August 29 post on X.

Throughout 2023, the SEC has taken legal actions against several cryptocurrency firms, alleging securities violations, including Binance and Coinbase. On August 29, asset manager Grayscale achieved a legal victory against the SEC when an appeal led to an order for a review of its application for a spot Bitcoin exchange-traded fund.

The civil lawsuit between the SEC and Ripple remains ongoing, with Judge Torres proposing a jury trial for the case to commence in the second quarter of 2024.

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