Ripple Labs Inc., joined by its top executives Brad Garlinghouse and Christian A. Larsen, has staunchly opposed the Securities and Exchange Commission (SEC)’s efforts to certify an interlocutory appeal, as revealed by Eleanor Terrett, a Fox Business reported. This case could be instrumental in defining the regulatory contours of the U.S. cryptocurrency space, mainly focusing on classifying Ripple’s digital asset, XRP, as an investment contract or otherwise.
🚨NEW: @Ripple files opposition to the @SECGov’s motion to certify interlocutory appeal. 👇🏼https://t.co/uKg4RBCnHC
— Eleanor Terrett (@EleanorTerrett) September 1, 2023
US SEC’s Regulatory Jigsaw Puzzle
According to a Sept 1 filing, the SEC embarked on the enforcement action in December 2020, asserting that most of Ripple’s transactions related to XRP for eight years should be seen through the lens of investment contracts.
However, Ripple, along with Garlinghouse and Larsen, believes that the SEC’s pursuit of this case is emblematic of its strategy of selectively regulating the U.S. crypto industry. They underscore the central point of contention: whether the Howey test applies to Ripple’s distinct operational circumstances. From their vantage point, the SEC seems to be recalibrating its “litigation positions” based on its goals, which they argue deviates from genuine commitment to legal standards.
Understanding Ripple’s Opposition
In pushing for an interlocutory appeal, US SEC predicates its move on the assertion that the Ripple case raises legal questions that have ramifications for the entire digital asset spectrum. Ripple’s rebuttal is multi-pronged:
They argue that the current court decision doesn’t raise a predominant “controlling question of law” that would warrant an interlocutory appeal. Additionally, what the SEC perceives as a “substantial ground for disagreement” appears to Ripple as the SEC’s dissatisfaction with the Court’s interpretation of the Howey test applied to their case. Lastly, Ripple believes that regardless of the interlocutory appeal’s outcome, the litigation’s intricacies and protraction are inevitable.
Ripple has aligned with individual defendants in objecting to the SEC’s call for a stay, emphasizing that the SEC hasn’t substantiated its grounds for such an action.
As Ripple takes on the SEC in this legal maelstrom, the implications of this battle will undoubtedly reverberate across the cryptocurrency industry. Clarity, or lack thereof, in regulations, could set the tone for how digital assets are perceived and traded in the future.
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