The debate over the regulatory status of XRP between the U.S. Securities and Exchange Commission (SEC) and Ripple Labs took a dramatic turn last week. The latest powerful gameplay? Hail Mary intermediate appeal from the authorities. The agency is attempting to appeal past court decisions that have allowed Ripple to use the “fair notice” defense. However, prominent lawyers have strongly opposed the approach, predicting that it will inevitably be rejected.
Ripple’s Chief Legal Counsel, James K Phelan, Coinbase CLO Paul Grewal has debunked the SEC’s bluff. They argue that the strict criteria for an interlocutory appeal still need to be met. Interim appeals in these cases will only proceed if waiting for a final judgment would cause “irreparable harm”. Phelan said the agency has yet to demonstrate the existence of such a hazard.
The attorney tweeted that the rejection was imminent: “Appeals court has strong legal reasons to deny SEC motion.” Grewal agreed the appeal was “without merit” and did not meet statutory requirements.
If denied, the sparring match will go to summary judgment. This involves the court reviewing evidence and arguments before allowing a trial. The background to this chaos can be traced back to 2020. At the time, the agency dropped an explosive lawsuit declaring that Ripple’s XRP sales violated securities laws.
The U.S. Securities and Exchange Commission (SEC) claims that more than $1.3 billion worth of XRP was sold without proper registration and disclosure. What’s more, regulators view XRP as more of an investment than a currency.
Potential wider impact on the crypto industry
Ripple insists on the opposite – XRP as a currency, not a security. The company also claimed that the agency should have been fair to warn about the state of XRP. Experts say the final judgment could affect future cryptocurrency rules. Will XRP and other coins like Bitcoin and Ethereum be securities or currencies?
Both parties continue to invest substantial resources in case. The appeal shows that the agency wants to crush Ripple’s defense before trial.
But Filan and Grewal’s predictions cast doubt on the SEC’s prospects. The agency may soon have to confront Ripple’s arguments head-on.
For cryptocurrency companies, the result could clarify the future of XRP. The same goes for broader issues surrounding coin regulation.
Ripple’s Legal Status and Defense Strategy
However, some regulatory uncertainty remains if the appeal is dismissed. US agencies can still justify their case against Ripple’s defense. So the legal rollercoaster ride continues. But for now, outspoken critics are questioning the authorities’ tactics.
Ripple and Coinbase seem confident that the appeal will fail. If they’re right, the SEC’s bravado has been dramatically debunked.
Featured image from Pixabay and chart from TradingView.com
