- The US Securities and Exchange Commission’s recent submission of an interlocutory appeal triggers discussions among individuals close to the case.
- According to Lawyer Bill Morgan, there is a slight change in language by SEC in their recent settlement with crypto exchange Bittrex.
Ripple Labs recently got a partial victory in its case against the US Securities and Exchange Commission (SEC) after U.S. District Judge Analisa Torres ruled that its sale of XRP on public exchanges did not violate federal securities laws. This is reported to be the first win for a crypto company in a case filed by the SEC.
However, SEC has decided to submit an interlocutory appeal, triggering discussions on its impact on the case. According to a document shared by attorney James K. Filan on August 9, the regulator has submitted a “letter outlining its basis for filing a motion for leave to file an interlocutory appeal regarding ‘programmatic’ offers and sales to XRP buyers over trading platforms and Ripple’s ‘other distributions.”
There have been several discussions surrounding the ruling and the SEC’s decision to appeal as several key figures close to the case get involved. According to attorney Stuart Alderoty, SEC does not have the right to appeal yet, which is why it is asking for permission to submit an interlocutory appeal.
Lawyer Bill Morgan also joined the discussion, claiming to have spotted a slight change in language in the settlement with crypto exchange Bittrex and its CEO William Shihara. According to Morgan, SEC did not use “selling digital asset securities” this time around. Rather, the regulator used “crypto assets offered and sold as securities.”
Ripple CTO and Some Attorneys Join the Discussion
Ripple’s Chief Technical Officer David Schwartz, in response to Morgan’s post, commented that SEC’s statement is completely incoherent.
Which is completely incoherent. The orange groves in Howey were offered and sold as securities. But real estate brokers would break no laws by selling those very same orange groves in simple asset sales.
The Ripple CTO also spoke about a comparison between XRP and Orange Grove in Howey. According to him, real estate brokers who offer and sell orange groves in simple asset sales would under no circumstances be accused of breaking any law. To explain this further, Schwartz stated that selling anything as security does not make it one.
If they just sold the trees carrying no rights or obligation to or from Howey, they would not be selling security. That something was offered or sold as a security because the offer was an investment contract doesn’t make the thing sold using the investment contract itself a security.
Another point of argument is the judge’s ruling that XRP ODL sales as institutional sales are securities. Commenting on this, Morgan stated that the judge did not explain why this category of sale was classified as an investment contract. According to him, there is no promise of profit share, hence, it was an error.
Where is the promise of a share in profits? How is there an investment? It was part of the undisputed record that these ODL users sold or exchanged their XRP in seconds.
Recently, a group of six securities law scholars filed an amicus brief to support Coinbase’s case against SEC. With this, Morgan believes that the decision cast some doubts on the “correctness” of the finding against Ripple in Judge Torres’ decision. According to him, the judge got it wrong if the six securities law scholars are correct.
As of press time, XRP was trading at $0.626641 after falling by 12 percent in the last 30 days. A successful appeal could largely affect the price. However, CryptoLaw’s John Deaton believes that SEC stands no chance against Ripple.
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