SEC says recent Ripple ruling could have ‘substantial impact’ on other court cases

The US Securities and Exchange Commission has filed a motion to leave to file for an interlocutory appeal in its lawsuit against Ripple Labs.

The SEC argued that an interlocutory appeal in place of a traditional appeal is necessary because “immediate appellate resolution of the two rulings makes it more likely that this Court will be able to assess in one proceeding the remedies for all of the violations for which Defendants are ultimately held liable.”

Lawyers for the SEC claimed that the rulings could have a “substantial impact on a large number of pending litigations.” The SEC currently has open cases concerning securities laws against Coinbase and Binance, to name a few.

“The Programmatic Sales ruling could have significant persuasive value in various pending SEC enforcement actions where issuers offered and sold crypto assets indiscriminately to public investors over crypto asset trading platforms, including cases pending in this district,” the SEC said.

Today’s filing argues that the Second Circuit Court of Appeals — which will oversee the interlocutory appeal if it is allowed to move forward — has previously overseen similar appeals to “resolve important questions of securities law.” 

In addition, the SEC has asked the court to stay proceedings pending the motion and “any forthcoming appeal.”

The SEC further argues that a “Second Circuit reversal vis-à-vis the XRP offers and sales on which the Order granted Defendants summary judgment could increase the likelihood of resolving ‘this litigation through settlement.’” This would therefore advance the termination of the case, while possibly preventing multiple trials.

Ripple Labs has until Sept. 1 to file opposition papers.

The filing comes after Judge Analisa Torres cleared a hurdle on Thursday for the SEC to request a motion to leave to file an appeal. She did not, however, approve the appeal. 

Earlier this week, Ripple Labs and co-defendants Brad Garlinghouse and Chris Larsen opposed the SEC’s request for an interlocutory appeal.

Lawyers for the defendants argued that the SEC had not met the “burden” required for it to “present facts that would support stretching [the Howey test] to cover all of the Defendants’ distributions of the digital asset XRP.”

The lawyers for the defendants also accused the SEC of performing an “about-face” to rush an appeal because it claims it’s going after “what it claims […] is a purely ‘legal question’ affecting all other digital-asset cases.” 

The defendants said in their Wednesday filing that they don’t oppose the SEC appealing “the Court’s decision in the normal course after a final judgment with a full record.”

In seeking an interlocutory appeal, the SEC is focusing on the judge’s decision on programmatic sales and “other distributions” which included the sale and offer of XRP in exchange for goods or services. 

In July, Judge Torres ruled that the programmatic sales of XRP did not meet all of the Howey test’s criteria. However, the institutional sales did meet Howey standards. 

The court noted that “having considered the economic reality of the Programmatic Sales, the Court concludes that the undisputed record does not establish the third Howey prong.”

Additionally, Garlinghouse and Larsen face an upcoming jury trial next spring centered around charges claiming that the two aided and abetted securities laws violations in regard to the XRP token. Ripple Labs itself does not face aiding and abetting charges.

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