The SEC has intensified its legal battle with Ripple Labs by filing a new appeal, challenging a key ruling regarding the classification of XRP. The SEC’s appeal targets a ruling made by Judge Analisa Torres, which previously stated that Ripple’s programmatic sales of XRP do not qualify as securities. With both parties gearing up for continued legal battles, the outcome could redefine regulatory standards for cryptocurrencies moving forward.
Amid these legal hurdles, speculation is brewing regarding the U.S. SEC’s recent emergency meeting, which is reportedly focused on a potential settlement in its ongoing appeal related to the XRP lawsuit with Ripple. This could represent a significant turning point for cryptocurrency regulation in the U.S. However, when a user inquired about the focus of the meeting being about Ripple, Marc Fagel, a former SEC lawyer, replied that it is “not,” implying that the discussion might not be centered on Ripple at all.
Ripple’s Chief Legal Officer, Stuart Alderoty, stated that the Second Circuit will either uphold or expand Judge Torres’s ruling, with the SEC’s best hope being a remand, which is unlikely. In the SEC’s failed interlocutory appeal, Judge Torres made it clear that the “Howey” test and Ripple’s Fair Notice defense would be reconsidered.
The Fair Notice standard asks if an average person would understand the law. The SEC might argue that Judge Torres didn’t fit this standard in her ruling against them, putting the agency in a tricky spot.
CEO Brad Garlinghouse wrote,
“As I said earlier this month, if Gensler and the SEC cared about the rule of law, they would accept their loss and move on. But they are not interested in faithfully applying the law or in providing clarity to industry players in the US. Under Chair Gensler, the agency is only interested in creating havoc – US innovation and technology be damned.”
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