The U.S. Securities and Exchange Commission (SEC) intends to appeal a recent court ruling in its case against crypto company Ripple Labs, as per which the sale of Ripple’s native token XRP (XRP-USD) on public exchanges did not violate federal securities laws.
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SEC’s Fight Against Ripple Labs
The SEC sued Ripple and its co-founder Chris Larsen in December 2020, alleging that they illegally raised over $1.3 billion through an unregistered securities offering by selling XRP.
Last month, U.S. District Judge Analisa Torres ruled partially in favor of Ripple, stating that the company’s programmatic sales of the XRP token to retail investors through public crypto exchanges cannot be considered securities offerings. The decision was welcomed by crypto players, including Coinbase (NASDAQ:COIN), which itself was sued by the SEC in June 2023. Coinbase and several other crypto exchanges resumed the trading of XRP on their platforms following the court ruling.
However, it should be noted that Judge Torres ruled that the sale of XRP directly to institutional investors constituted a violation of federal securities laws.
Commenting on the SEC’s latest move, Stuart Alderoty, the chief legal officer of Ripple Labs, tweeted, “The SEC does not have the “right” to appeal just yet which is why they are asking permission to file an “interlocutory” appeal. Ripple will file its response with the Court next week. Stay tuned.”
The SEC has been claiming for years that cryptocurrencies are securities like stocks and bonds and consequently, it has the power to regulate them. However, Coinbase, Binance (BNB-USD), and several other firms have been arguing about the lack of clarity on the regulations governing the crypto market.
It is interesting to note that recently in a case involving Terraform Labs, U.S. District Judge Jed Rakoff expressed his disagreement with Torres’ ruling, contending that there is no difference between public and institutional sales.
On Thursday, XRP-USD was down 2.3% as of writing. That said, it has risen almost 84% year-to-date.
