The federal judge presiding over litigation between the Securities and Exchange Commission and the crypto firm Ripple said on Thursday that the SEC can file a motion to appeal a portion of her recent ruling that many in crypto saw as a win for the industry.
The judge, Analisa Torres, gave the federal agency until Friday to file its motion, which will not broach the entire case.
The question of whether two Ripple executives, Brad Garlinghouse and Chris Larsen, unlawfully sold the cryptocurrency XRP in unregistered securities offerings will still go to trial. The SEC plans to appeal Torres’s judgment that institutional sales of XRP—or sales to investors like venture capital firms—are illegal securities offerings while secondary sales of the digital asset aren’t.
Legal observers said the judge’s decision was a blow to the federal agency, which is in the midst of a broader crackdown on the crypto industry following the collapse of the now-bankrupt exchange FTX.
Reminder – the request for appeal (even if granted) doesn’t change the fact that XRP is not a security. That’s not up for debate / trial. But the SEC continues to claim that Chris and I acted recklessly in believing that XRP is not a security. That’s utter nonsense. 1/2 https://t.co/pG7z0jsjlt
— Brad Garlinghouse (@bgarlinghouse) August 16, 2023
A spokesperson for Ripple didn’t immediately respond to a request for comment. An SEC spokesperson declined to comment.
Torres’s most recent decision in the SEC’s litigation against Ripple is the latest in a landmark case that could influence the future of crypto in the U.S.
In December 2020, the SEC sued Ripple, the core developer behind the cryptocurrency XRP. Central to the agency’s allegations were that XRP was an unregistered security, or similar to shares in a public company. Ripple, however, said it was a commodity, or something more akin to gold or sugar.
For more than two years, the case has wound its way through court. Meanwhile, the SEC has accelerated litigation against crypto companies, using the same legal logic that underpins its case against Ripple—that the vast majority of cryptocurrencies are securities—to file blockbuster lawsuits against some of the largest players in the industry, including Binance and Coinbase.
But in July, Torres finally delivered a summary judgment in the case. “This ruling directly undercuts the SEC’s claims that nearly all tokens are inherently securities—likely to set a positive precedent for other digital tokens in the U.S.,” Garlinghouse, Ripple’s CEO, said on Twitter.
However, with the SEC’s plan to appeal, the agency has indicated that its protracted legal battle with Ripple won’t be over anytime soon.