On Wednesday, the Securities and Exchange Commission (SEC) indicated that it was planning on appealing a recent decision of the court in its lawsuit against Ripple Labs.
According to the said decision from the court, the crypto token XRP does not necessarily classify as security on its face.
The intention
In a court filing, the US financial watchdog said that it wanted to challenge the decision of the court, which declared that sales of the XRP token to buyers did not classify as a sale or offer of securities.
The SEC said that an interlocutory review was required in this situation. This kind of appeal asks the court to review the decisions taken while the case is still ongoing.
According to the securities regulator, they need an appellate review because a number of its actions will be impacted by how the issues are resolved.
After the filing from the SEC, there was a drop in the price of the XRP token. According to CoinGecko, there was a decline of about 1% in the token to $0.63 at publishing time.
Nonetheless, the token has managed to record gains of about 33% in the last month after the court decision was announced.
The ruling
Last month, Judge Analisa Torres ruled that the sales of the XRP token did not classify as sales of unregistered securities, as long as they were made to public buyers or it was distributed to employees.
She was referring to programmatic sales, which are the scheduled sales of the token via crypto exchanges.
However, the judge also said that Ripple Labs’ sales of the XRP tokens to institutional investors did classify as sale of unregistered securities.
Jeremy Hogan, a partner at Hogan & Hogan, said on Twitter that the appeal of the SEC will not question the status of XRP as a security.
Instead, it would focus on the losses of the SEC when it comes to individual and programmatic sales.
More details
According to the agency, the court filing on Wednesday was aimed at outlining its reason for seeking leave.
This means that it was essentially asking permission from the court for deviating from the established course of the case.
Ahead of the filing of the SEC, a trial date had already been set by Judge Torres for the lawsuit, which is in 2024.
The battle between Ripple Labs and the SEC started back in December 2020 when the latter filed a lawsuit against the former.
The securities regulator had made allegations against the company and its two founders, Chris Larsen and Brad Garlinghouse. The former is the executive chairman, while the latter is the CEO.
They had been accused of raising a sum of $2.3 billion through the sale of the XRP token, which the SEC said was an unregistered security.
There have been hints that Torres’ decision did not sit well with the SEC. Gary Gensler, the chairman of the agency, said that had been ‘disappointed’ with some elements of the decision.
In its lawsuit against Terraform Labs and its co-founder, the agency said that the Ripple lawsuit had been ‘wrongfully decided’.