Deadline looms for SEC to appeal Ripple ruling
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The future of U.S. crypto regulation could hinge on a long-awaited decision by Wall Street’s top cop on whether to appeal a ruling from its high-profile legal battle with blockchain payments company Ripple.
The Securities and Exchange Commission has until Oct. 7 to decide if it will challenge the July 2023 ruling by U.S. District Judge Analisa Torres that deemed only some of Ripple’s sales of the XRP crypto token violated securities laws, a decision that has garnered criticism from securities lawyers and other federal judges.
That said, the ruling is considered a major legal victory for the still-nascent crypto industry as it attempts to prove that the emerging asset class is not in violation of U.S. securities laws, as the SEC believes. It has also become a cornerstone in the legal strategies of other crypto entities like exchanges Coinbase, Binance and Kraken, which are currently being sued by the commission for allegedly selling unregistered securities.
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That’s why former SEC lawyers who spoke with FOX Business say an appeal is likely as the agency, and its crypto-skeptic chairman, Gary Gensler, are determined to assert jurisdiction over the $2 trillion industry and don’t want to endorse a dual system of disclosure that the Torres opinion could create in the securities markets.
“I believe the SEC will appeal. I would think it would not want to have the programmatic trading analysis stand,” said Marc Powers, a blockchain professor at the Florida International University College of Law and former SEC enforcement attorney. “It creates inconsistency in rulings by district court judges and in the Second Circuit.”
Press representatives for the SEC and Ripple declined to comment for this story.
The SEC already signaled its intent last year when it filed a so-called interlocutory appeal (an emergency appeal that’s filed before summary judgment) to challenge Torres’ decision. Torres denied the request but said the SEC could try again after summary judgment.
A novelty Bitcoin token during the NFT.NYC 2024 conference in New York, US, on Wednesday, April 3, 2024. NFTs, which went from being touted as the cutting edge of the digital frontier to the punchline for the most recent crypto bust, are suddenly sta (Photographer: Timothy Fadek/Bloomberg via Getty Images / Getty Images)
Disclosure is the bedrock of the nation’s securities laws. When a company sells stock to raise capital and expand operations, it’s required to make voluminous filings that provide investors with the information they need to gauge whether to buy shares. Some legal experts say Torres’ ruling upended this disclosure mandate.
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Her decision stated that Ripple’s $728…