- The SEC is actively pursuing an appeal against Judge Torres’ ruling on XRP, signaling continued legal challenges for Ripple.
- Legal experts are divided on the potential success of the SEC’s appeal, while XRP’s price sees a notable uptick due to heightened investor interest.
The U.S. Securities and Exchange Commission (SEC) has intensified its legal campaign against Ripple by preparing to appeal Judge Analisa Torres’ summary judgment on XRP, the cryptocurrency at the center of a high-profile case. This decision stems from Judge Torres’ July 2023 ruling, which has been considered a significant victory for Ripple. The judgment determined that XRP was not classified as a security when sold on secondary markets, a key factor in Ripple’s defense.
However, the SEC, under Chair Gary Gensler’s leadership, appears poised to challenge this outcome, indicating that the legal saga surrounding XRP is far from over.
SEC’s Intent to Appeal
The SEC’s decision to appeal has gained momentum, with reports indicating that the agency may challenge Judge Torres’ application of the Howey Test, a legal criterion used to determine whether a transaction qualifies as an investment contract. The appeal is expected to focus on whether the ruling appropriately applied the third prong of the Howey Test, which examines the existence of a “common enterprise” in XRP sales. Some legal experts, such as former SEC attorneys, believe the agency has a strong incentive to pursue an appeal, as it seeks to assert its regulatory authority over digital assets.
Attorney John Deaton, who represents a significant group of XRP holders pro bono, has expressed skepticism about the SEC’s chances of success. Deaton highlighted that Judge Torres’ decision was based on a meticulous examination of facts, particularly pointing out that the SEC failed to present expert testimony related to XRP holders. He emphasized that even if the appeals court were to find fault with the ruling, the case would likely be returned to Judge Torres, who would still have ample grounds to rule in favor of Ripple.
This scenario could lead to further delays and continued legal expenses for both parties.
While Deaton casts doubt on the SEC’s prospects, other legal professionals suggest the appeal could hinge on the makeup of the appellate panel. Fred Rispoli, another prominent attorney involved in the case, noted that if the SEC is fortunate enough to face a panel sympathetic to its regulatory stance, it might secure a favorable outcome. However, such an alignment of judges would be a rare occurrence, underscoring the significant uncertainty that surrounds the SEC’s potential appeal.
Rispoli also pointed out that the SEC’s broader strategy may be to delay the case further, potentially prolonging the uncertainty around XRP and its regulatory classification. Such a delay could serve to slow the momentum of Ripple and other blockchain firms seeking regulatory clarity. A win for Ripple, however, would bolster the argument that secondary sales of XRP do not qualify as investment contracts, a development that would reverberate across the entire cryptocurrency industry.
Market Reaction and XRP’s Rising Price
Despite the looming legal battles, XRP’s price has been on an upward trend, driven by renewed interest from investors who view Ripple’s legal successes as a positive signal for the future of the cryptocurrency. In the last 24 hours alone, XRP has seen a 2% price increase, with its value hovering around $0.602. Market analysts suggest that the cryptocurrency could target a price of $2 in the near future, contingent upon favorable legal outcomes.
Trading volume for XRP has also surged by 21%, reflecting a growing level of investor confidence. This increase suggests that market participants are closely watching the developments in Ripple’s case, with many speculating that a final victory against the SEC could solidify XRP’s standing in the digital asset landscape. However, the uncertainty surrounding the appeal means that the cryptocurrency market remains volatile, with each legal development potentially affecting XRP’s valuation.
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