SEC to Appeal Landmark Ripple Decision on XRP Security Classification

**U.S. Securities and Exchange Commission to Appeal XRP Ruling**

The U.S. Securities and Exchange Commission (SEC) has announced its intention to appeal a recent decision regarding the classification of the XRP cryptocurrency. In July, Judge Analisa Torres ruled that sales of Ripple’s XRP token did not constitute a security in certain circumstances. However, the SEC has disagreed with this ruling and will seek to appeal the judge’s decision on programmatic sales. This appeal comes as another SDNY judge expressed doubts about Torres’s arguments in a separate case, adding complexity to the matter.

**Background: The Ripple Case and its Significance**

The Ripple case has become a significant battle within the blockchain industry. Ripple, founded in 2012, is a high-profile crypto company but has faced regulatory scrutiny regarding its XRP token. In 2020, the SEC charged Ripple with conducting an unregistered digital asset securities offering and raising over $1.3 billion. The case has brought to light a central debate in the sector surrounding the regulation of cryptocurrencies as securities or commodities.

**Judge’s Ruling: XRP as a Security**

Judge Torres’s ruling stated that XRP itself does not constitute a security. She also concluded that XRP sales were only considered securities when sold to sophisticated investors. This ruling was seen by many as a positive development for the crypto industry, as it suggested that programmatic sales, including those conducted through prominent exchanges like Coinbase and Binance, would be outside the SEC’s jurisdiction.

**The Appeal Process and Pending Litigation**

Despite the optimistic implications of the ruling, the case is not yet settled, as Judge Torres has left certain questions for a later jury trial. These questions include whether two Ripple executives can be held liable for the unlawful offer and sale of securities. The trial is expected to take place in the second quarter of 2023. The ongoing nature of the case complicates the appeal process, leading the SEC to request a stay on the court’s proceedings and scheduling order.

The SEC argues that Judge Torres’s ruling has wider implications for other pending litigation involving Coinbase, Binance, and Huobi founder Justin Sun. The agency also points out that another SDNY judge expressed a disagreement on the question of programmatic sales in a separate case involving Terraform Labs, the developer of the failed TerraUSD stablecoin.

**Appeal Schedule and Process**

According to the SEC’s letter, Ripple will have until August 16 to respond to the appeal, and the SEC will file its opening brief two days later. The appeal will be heard in the U.S. Court of Appeals for the Second Circuit, moving the case to a higher judicial authority.

In summary, the SEC’s decision to appeal the ruling on the XRP cryptocurrency’s classification as a security demonstrates the significance of this case for the blockchain industry. The ongoing legal battles surrounding XRP and other cryptocurrencies reflect the debate regarding their regulatory status. This appeal process will shed light on the evolving legal landscape and shape the future of cryptocurrency regulation.

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