SEC Can Try to Appeal Groundbreaking XRP Ruling, Judge Rules

A federal judge will let the U.S. Securities and Exchange Commission file a motion that, if granted, would allow it to appeal a ruling that XRP transactions through exchanges didn’t violate securities laws.

AccessTimeIconAug 17, 2023 at 6:11 p.m. UTC
Updated Aug 18, 2023 at 4:31 p.m. UTC

A federal judge has let the U.S. Securities and Exchange Commission (SEC) argue it can appeal against her ruling that Ripple didn’t violate securities laws in making XRP available to retail traders by putting it on exchanges.

Judge Analisa Torres, of the U.S. District Court for the Southern District of New York, granted the request for leave to file a motion to file an interlocutory appeal Thursday, giving the SEC until Friday to file the motion itself. The SEC announced it was filing the appeal last week, after hinting it would do so in July.

Ripple has until Sept. 1 to file its response to the motion, and the SEC can reply by Sept. 8. Should the SEC win its motion, it can then ask an appeals court for permission file the actual appeal of the ruling.

A Ripple spokesperson didn't have an immediate comment. An SEC spokesperson declined to comment.

Ripple Chief Legal Officer Stuart Alderoty previously said on X, the platform formerly known as Twitter, that the company opposed the request.

“There is no extraordinary circumstance here that would justify departing from the rule requiring all issues as to all parties to be resolved before an appeal,” he said.

The price of XRP did not seem to react much to the order itself, though it is down roughly 4% over the past 24 hours, according to CoinGecko.

The SEC has a steep hill to climb in getting approval from Judge Torres, said ConsenSys Senior Counsel and Director of Global Regulatory Matters Bill Hughes.

"The legal standard is a difficult one to satisfy, and the particulars of this case also do not help SEC's argument in favor of appeal. In fact, the SEC itself has undermined its current arguments for an appeal by previously indicating that a decision in Ripple does not really bear on any other crypto securities lawsuit. It's unlikely that the court will be persuaded by them speaking out of both sides of their mouth," he said. "And even if Judge Torres does grant their motion, they then have another steep mountain to climb – getting the Second Circuit's approval to file an appeal."

The appeal process itself won't pause the rest of the case, said Dave Rodman, the founder and managing partner of the Rodman Law Group. However, if the SEC wins approval from both Judge Torres and the Second Circuit Court of Appeals to file the appeal, the circuit court may issue a stay on all proceedings until the appeal has been resolved.

"We think that this cause would probably be stayed given the nature of the determination subject to appeal," he told CoinDesk.

Elizabeth Napolitano contributed reporting.

CORRECTION (Aug. 17, 2023, 18:30 UTC): Corrects that if the SEC wins permission from Judge Torres to file an appeal, it must then seek permission from the Second Circuit Court of Appeals.

UPDATE (Aug. 17, 18:40 UTC): Adds comments from Hughes and Rodman.

Edited by Nick Baker.


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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.