Bitrabo Editorial
There is a possibility that the Securities and Exchange Commission (SEC) may decide against appealing the summary judgment ruling partially favoring Ripple Labs by Judge Analisa Torres. This move hints at a strategic shift to avoid setting a potentially unfavorable precedent in higher courts. The decision on whether to appeal is still pending while awaiting the court’s remedies phase ruling, expected by the end of Summer 2024, following which the SEC’s window to appeal will open.
Reasons Behind SEC’s Potential Avoidance of Appeal Against Ripple
Former head of the SEC’s Enforcement’s Cyber Unit, Kristina Littman, shared insights on the SEC’s potential actions during a recent digital assets conference. She suggested that due to mixed judicial opinions in similar cases, the SEC might accept the district court’s decision instead of appealing.
Littman highlighted the ambiguity and strategic considerations behind the scenes, stating uncertainty around potential judicial conflicts complicating the decision to appeal. She conveyed that there is speculation around the SEC allowing the Ripple opinion to remain at the district court level to avoid risking unfavorable outcomes at a circuit level.
The Stakes Involved
The initial ruling in July 2023 determined that Ripple’s programmatic sales and secondary market transactions were not deemed security transactions, with the company prevailing on three of the four contested points. Judge Torres specifically categorized sales of XRP to institutional clients as security transactions.
This ruling marked a significant win for Ripple amid an ongoing debate over whether XRP should be classified as a security. The judgment heavily relied on interpretations of US securities laws, particularly their application to digital assets not explicitly addressed in current regulations.
Conflicting rulings in related cases have further complicated the landscape. In a separate case of SEC vs. Terraform Labs, Judge Rakoff opposed Judge Torres’ rationale from the Ripple case. Crypto exchange Coinbase has aligned more closely with the Terraform Labs case instead of referencing the Ripple decision, adding to regulatory uncertainties.
Littman’s remarks indicate a broader strategic move within the SEC to potentially avoid solidifying unfavorable legal precedents at the appellate level, which could impede effective regulation in the sector. By refraining from appealing, the SEC may aim to maintain a flexible regulatory approach.
At the current time, XRP is trading at $0.50054.