A U.S. district judge has granted the Securities and Exchange Commission (SEC) permission to file a motion for leave to file an interlocutory appeal in its case against cryptocurrency platform Ripple Labs.
This decision by Judge Analisa Torres allows the SEC to bring the case to the U.S. Court of Appeals for the Second Circuit, Cointelegraph reported Thursday (Aug. 17). Ripple Labs will also have the opportunity to oppose the motion.
An interlocutory appeal is when a ruling by a trial court is appealed while other aspects of the case are still ongoing, according to the report. The SEC’s request for an appeal has raised concerns about its potential impact on multiple pending court cases. In a letter to Judge Torres, the SEC acknowledged that her decision could have broader implications.
Ripple Labs, on the other hand, has expressed opposition to the potential appeal, the report said.
The company’s lawyers presented three main arguments against the SEC’s request. They argued that an appeal requires a pure question of law, and the SEC’s request does not raise any new legal issues that need to be reviewed. They also stated that the SEC’s claim of an incorrect court ruling is not sufficient, and an immediate appeal would not advance the termination litigation proceedings.
Torres had previously ruled on July 13 that Ripple’s native XRP token is not a security when distributed in public sales but is considered a security in institutional sales, per the report. This ruling has been a significant development in the ongoing case against Ripple, which began in December 2020 when the SEC sued the company and its two chief executives, Brad Garlinghouse and Chris Larsen, over allegations of offering an unregistered security.
Garlinghouse has expressed his belief that the SEC would face a lengthy appeals process, according to the report. He stated that the law currently recognizes XRP as not being a security, and until the SEC has the opportunity to file an appeal, which could take years, he remains optimistic. Garlinghouse believes that an appeal against the retail sales ruling would only further solidify Judge Torres’ decision.
The judge’s July 13 ruling will have far-ranging repercussions across the digital asset ecosystem, which has long argued that its tokens do not represent securities contracts.