SEC Will Appeal XRP Ruling in Case Against Ripple

A federal judge ruled that while Ripple's direct sales of XRP to institutional investors violated securities law, its programmatic sales to retail investors through exchanges did not.

AccessTimeIconAug 9, 2023 at 9:33 p.m. UTC
Updated Aug 10, 2023 at 6:14 p.m. UTC
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The U.S. Securities and Exchange Commission will file an "interlocutory appeal" of a judge's ruling on Ripple's programmatic sales of XRP, the regulator said in a court filing on Wednesday.

The SEC said it was seeking "leave to" appeal part of a recent decision while other parts of the SEC's case proceed to trial. The regulator said approval of an interlocutory appeal could prevent the SEC and government from needing two trials.

"Specifically, the SEC seeks to certify the court’s holding that defendants’ 'programmatic' offers and sales to XRP buyers over crypto asset trading platforms and Ripple’s 'other distributions' in exchange for labor and services did not involve the offer or sale of securities under [the Howey test]," the SEC filing said.

A federal judge ruled last month that while Ripple's direct sales of XRP to institutional investors violated securities law, its programmatic sales to retail investors through exchanges did not. The SEC had sued Ripple in 2020, alleging that the firm was selling unregistered securities in XRP.

Judge Analisa Torres, of the U.S. Southern District Court, had tentatively scheduled a trial on other issues that she didn't rule on during the motions for judgement for the second quarter of 2024.

In its filing, the SEC noted that Ripple will have to respond by Aug. 16 (a week from the letter's filing), and proposed filing an opening brief laying out the appeal on Aug. 18. Ripple would have two weeks to respond, and the SEC would have another week to reply to Ripple if the judge signs off on the filing.

The SEC had previously hinted that it might appeal the ruling in a separate case, when attorneys for the regulator urged U.S. District Judge Jed Rakoff of the same court to ignore the ruling as he mulled over Terraform Labs' motion to dismiss its own SEC lawsuit. Rakoff later denied the motion to dismiss, rejecting Torres' ruling on programmatic sales in the process.

UPDATE (Aug. 9, 2023, 21:40 UTC): Adds additional detail.

Edited by Aoyon Ashraf.


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Nikhilesh De

Nikhilesh De is CoinDesk's managing editor for global policy and regulation. He owns marginal amounts of bitcoin and ether.

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