Ripple Labs opposes ‘gambit’ appeal request by the SEC

Ripple Labs argued that the SEC doesn’t meet the standards necessary to move forward with an interlocutory appeal

article-image

Jievani/Shutterstock modified by Blockworks

share

The US Securities and Exchange Commission is seeking to file an appeal in its legal battle against Ripple Labs, and now the distributed ledger tech firm, along with CEO Brad Garlinghouse and former CEO Christian Larsen — both of whom are also listed as defendants — have responded in court.

Lawyers for Ripple Labs wrote in a letter that the SEC only filed the interlocutory appeal request last week as an “about face” because of its strategy to regulate the digital asset sector by enforcement. 

“Having failed to meet its burden to present facts that would support stretching Howey to cover all of the Defendants’ distributions of the digital asset XRP, the SEC now does an about-face and rushes to appeal what it claims…is a purely ‘legal question’ affecting all other digital-asset cases,” Ripple Labs and the other defendants wrote to Judge Analisa Torres.

In its request for an interlocutory appeal, the SEC claimed that the appeal — if allowed to progress — would “avoid the possibility of engaging in protracted remedies” in litigation.

The SEC cited the ongoing cases, though it did not name a specific one, saying that issues could arise from the initial Ripple Labs ruling in “various pending cases, including many in this Circuit where the alleged investment contracts were offered and sold by issuers — like Ripple — on crypto asset trading platforms or for non-cash consideration.”

In July, Judge Torres ruled that XRP was not a security when used in “programmatic” sales. However, Torres wrote that it did meet the standards of the Howey test in the context of institutional sales.

In its filing, the SEC said it sought to appeal the judge’s decision on programmatic sales and “other distributions,” which included the sale and offer of XRP in exchange for goods or services.

“The Court’s holdings that Defendants’ “Programmatic Sales,” as well as Ripple’s “Other Distributions,” were not the offer or sale of an investment contract applied Howey’s legal standard to an extensive factual record,” defendants wrote Wednesday.

Read more: Ripple Labs v. SEC jury trial is set for spring 2024

Ripple Labs argued that the SEC doesn’t meet the standards necessary to move forward with an interlocutory appeal, specifically saying that the regulatory body doesn’t have enough to show “a substantial ground for difference of opinion.”

And, despite the SEC claiming that the court reached the “wrong result in applying that test,” it “does not show any difference of opinion about an underlying legal rule.”

However, Ripple Labs says that the SEC is welcome to pursue an appeal “in the normal course after a final judgment with a full record.”

Updated Aug. 16, 2023 at 5:55 pm ET: Listed Brad Garlinghouse and Christian Larsen as co-defendants.

Updated Aug. 16, 2023 at 5:45 pm ET: Added additional context throughout.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Permissionless is a conference for founders, application developers, and users. Come meet the next generation of people building and using crypto.

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

4.png

Research

This months PPGC covered four main areas. Firstly, debriefing the progress and status of the mainnet implementation of the Ahmedabad hard fork. Secondly, a retrospective on the testnet phase of the Ahemdabad Hard Fork. Thirdly, an update on PIP-36 which involves replaying failed state syncs. Lastly, PIP-47 which pushes upgrades to the Polygon Protocol Council.

article-image

Institutions to test out the settlement of “digital assets and currencies” on a network that annually carries more than 5 billion financial messages

article-image

After Bitwise’s XRP ETF filing this week, one industry watcher notes: “Politics will determine whether this happens soon or in a few years”

article-image

Plus, a look back at some of the SEC’s biggest enforcement moves under Gurbir Grewal

article-image

The forward-looking financial system is being championed by several contributors to India’s UPI digital money system

article-image

Multiple teams are pursuing integration cross-chain and off-chain

article-image

An SEC spokesperson told Blockworks the Ripple judgment clashes with Supreme Court precedent and securities laws