Ripple Strikes Back: Countering SEC’s Appeal with an Opposing Motion

In a widely anticipated move within the digital currency ecosystem, Ripple Labs Inc has taken a strategic albeit predictable step by submitting its opposition to the pending motion seeking permission for an interlocutory appeal, which was filed by the United States (US) Securities and Exchange Commission (SEC) just last week in the ongoing legal dispute of Ripple vs. SEC.

#XRPCommunity#SECGov v. #Ripple#XRP BREAKING: Ripple files it’s opposition to the SEC’s anticipated motion for leave to file an interlocutory appeal. pic.twitter.com/Rk8Ho0Gfxw
— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) August 16, 2023
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🚨NEW: @Ripple files its response to the @SECGov’s anticipated interlocutory appeal.

The company, @bgarlinghouse and @chrislarsensf oppose the appeal on the following grounds:

1. The Court's Order Does Not Involve a Controlling Question of Law.

2 The SEC Cannot Show a…
— Eleanor Terrett (@EleanorTerrett) August 16, 2023
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Addressing this development, Ripple's legal team, in a letter dated 16 August 2023 to Judge AnalisaTorres of the Southern District of New York, expounded on the intricate details. They articulated that the SEC's application for an interlocutory appeal should be declined, citing the SEC's failure to meet the stipulated criteria of the Howey test regarding the distribution of XRP — a fundamental "legal question."

An excerpt of the letter

Ripple's legal representatives assert that a more judicious course of action would be for the SEC to pursue an appeal subsequent to the final judgment, accompanied by a comprehensive record of proceedings. This approach aligns with the essence of a fair legal process and allows for a more comprehensive assessment of the case's nuances.

Why is an Interlocutory Appeal Needed and What is it?

Evidently opposed to the segment of Judge Analisa’s ruling just a month ago that designates XRP token trading on secondary platforms as non-securities, the SEC has taken a strategic stance. While cognizant of its limited scope for an immediate appeal, the SEC has pursued an alternative avenue via the interlocutory appeal request. This move comes as no surprise to industry observers who have recognised the formidable challenge the market's regulatory authority faces in reconciling this ruling.

In essence, the concept of an interlocutory appeal is a legal move that permits the challenge of a trial court's decision while other facets of the case continue to unfold. This privilege is only granted under specific circumstances.

What Does the Letter Entail?

Within Ripple's counterargument to the SEC's request, its legal team articulates three principal points of contention. Firstly, they assert that for an appeal to be warranted, it must pertain to a precise question of law, an element not satisfied by the SEC's present application, which does not introduce novel legal complexities necessitating re-examination.

Next, Ripple's legal representatives contest the SEC's assertion that the court's initial ruling was erroneous. They highlight the imperative for the SEC to demonstrate a tangible conflict between two distinct courts regarding the core issues — a benchmark that, according to Ripple's perspective, remains unmet in this context.

Lastly, Ripple's attorneys underscore the inefficacy of an immediate appeal in advancing the resolution of the ongoing litigation. This pivotal argument emphasises the need for strategic sequencing in legal proceedings, aligning with the notion that an untimely appeal could potentially disrupt the overall trajectory of the termination litigation process.

Chief Legal Officer (CLO) at Ripple, Stuart Alderoty, has provided a comprehensive insight into the prevailing scenario. He underscores the absence of any exceptional circumstances that might necessitate a deviation from standard legal protocols, “There is no extraordinary circumstance here that would justify departing from the rule requiring all issues as to all parties to be resolved before an appeal.”

An Evolving Narrative That Sees No End in Sight…Yet

Numerous legal experts within the digital currency realm have been advocating a potential sweeping triumph for Ripple ever since the substantive aspects of the case were unveiled for public scrutiny. The robustness of Ripple's arguments, as presented in this Appeal, has triggered a cascade of intriguing speculations that unveil a nuanced and unexpected dimension in this nearly three-year-long lawsuit.

So as the Ripple vs. SEC saga unfolds, the decision on this matter holds the potential to significantly shape the trajectory of the proceedings.