The cryptocurrency community is gearing up for the second phase of the high-profile case between the United States Securities Exchange Commission (SEC) and blockchain firm Ripple. The anticipation is building after the SEC announced it was prepared to submit its interlocutory appeal against the Ripple ruling delivered by Judge Analisa Torres.
While the ruling was seen as a partial victory for Ripple, the regulatory body is poised to file an appeal before the commencement of the trial phase.
Already, Ripple has pushed back, saying it opposes the SEC’s move to fast-track the appeals process. Meanwhile, defense lawyer James Filan has revealed that the SEC has informed the court of the dates when it will be available for trial in Q2 2024.
Factors to influence Ripple vs SEC battle 2
Therefore, several parties involved in the case have offered a glimpse of what to expect and elements likely to influence the outcome. For instance, following the intention of the SEC to appeal, XRP holder lawyer John Deaton revealed crucial undisclosed information that could aid Ripple’s legal team in countering the SEC’s appeal.
Deaton highlighted an unpublished “memo” from the SEC’s enforcement lawyers, emphasizing that Judge Sarah Netburn deemed it significant to mention that the memo’s authors did not propose any action against the XRP token.
Notably, in June 2018, the SEC reviewed a memo on whether XRP is a security. The memo did not find enough evidence to warrant any action, such as declaring XRP a security or alleging Ripple’s sale of unregistered securities. Therefore, the SEC did not take any action at that time.
Deaton said that the memo was inconclusive and that the SEC could still take action.
At the same time, the SEC’s interpretation of the Howey Test is likely to play out in court. Similarly, Deaton criticized the SEC for misinterpreting the Howey Test to regulate cryptocurrencies as securities.
SEC’s precedent in other crypto cases
In this case, the SEC’s ability to enforce the law in the crypto space will likely be called into question. Ripple’s lawyers will probably point to the SEC’s performance in other crypto cases, such as the recent appeals court ruling that ordered the SEC to review its rejection of Grayscale’s Bitcoin Exchange-Traded Fund (ETF) bid.
Ripple’s chief legal officer, Stuart Alderoty, has already pointed out that the SEC is “getting battered in court,” which will likely set a precedent for other crypto cases involving the regulator.
Notably, the SEC defends its actions, saying it is trying to protect investors from fraud.
In the meantime, the value of XRP and how it will respond to the case outcome remains a focal point. Notably, after the initial ruling that declared that XRP is not a security, the token surged in value, influencing the general market. Overall, if the appeal goes against Ripple, it will be interesting to monitor how XRP performs.
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