USA The U.S. Securities and Exchange Commission has filed a document urging the court to grant its motion to appeal the ruling in a Ripple Labs lawsuit that argued that XRP was not a security when it was sold to retail investors.
The agency argued that there were “difficult legal issues” surrounding the court’s application of the law, particularly the Howey test, that needed to be reviewed.
— James K. Filan (@FilanLaw) September 8, 2023
The SEC called on the U.S. District Court for the Southern District of New York to grant its interlocutory appeal motion and “stay further proceedings pending resolution of the appeal,” according to a Sept. 8 filing.
“The SEC now respectfully requests certification for appellate review because the issues raised by the Court’s order on summary judgment (DE 874) (the ‘Order’) are exactly the kind of ‘thorny legal issues’ that led Congress to provide for interlocutory review.”
Judge Analisa Torres ruled in July that XRP generally does not qualify as a security under SEC guidelines, particularly when distributed through programmatic sales, such as through an exchange to retail.
In its latest filing, the SEC argued that the ruling on programmatic sales and other distributions raised “legal issues” that were serious enough to warrant the agency’s interlocutory appeals from the court.
The SEC said this was due to a legal gray area regarding whether certain crypto assets fall under the classification of investment contracts under the Howey test, as it highlighted court proceedings in other cases.
“At least two opinions in the district have reached conflicting legal conclusions on these issues, and many other courts are considering whether similar offers and sales […] to Howey’s satisfaction,” the SEC said, adding:
“While interlocutory appeals should be the exception rather than the rule, this is an unusual case and the defendants themselves say the issues are of industry-wide significance and have special consequences, so it is exactly the type of case the second appeal relates to. The circuit court issued an interlocutory appeal.”
However, these views appear to contradict previous statements by the agency and its chairman, Gary Gensler.
Gensler has steadfastly rejected the need for new cryptocurrency regulation on multiple occasions, as he claimed that the SEC already has clear guidelines that adequately cover the entire scope of the cryptocurrency market.
This view includes the concept that most cryptocurrencies on the market fall under the definition of securities.
related: Here’s What’s Happening in Cryptocurrency Today
In a September 8 tweet, Ripple chief legal officer Stuart Alderoty called the document “hypocritical,” noting: “After its chairman has said for years ‘the rules are clear and must be followed’ Following this, the US Securities and Exchange Commission (SEC) is now calling for an urgent appeal “as needed to resolve these ‘thorny legal issues’.” “
Another SEC filing, another pivot point of hypocrisy…
For years, the SEC chairman has said “the rules are clear and must be followed,” but now the SEC is calling for an urgent appeal to resolve these “thorny legal issues.” https://t.co/ige4neIWRD
— Stuart Alderoty (@s_alderoty) September 8, 2023
Coinbase chief legal officer Paul Grewal also said ring How can cryptocurrency companies get “fair notice” if there are thorny legal issues that need to be considered in court.
The SEC initially appealed and stayed Torres’ decision in August, finding “a significant difference of opinion.”
On September 1, Ripple Labs launched a counterattack and submitted a legal memorandum of objection, saying that the SEC’s reasons for requesting an appeal were not sufficient.
Magazine: Cryptocurrency Regulation – Does SEC Chairman Gary Gensler Have the Final Say?