The U.S. Securities and Exchange Commission (SEC) asserted on Friday that the question of whether Ripple breached securities laws when offering XRP to retail investors through cryptocurrency exchanges unquestionably necessitates the intervention of an appeals court.
The SEC issued a rebuttal to a Ripple memorandum that presented a contrary viewpoint in their ongoing legal battle against the cryptocurrency firm closely tied to XRP. While Ripple contended last week that the SEC had failed to provide a compelling basis for an appeal, the filing submitted on Friday countered this argument vigorously.
"The Defendants themselves say that the issues have industry-wide significance and are of special consequence," the filing said.
The SEC has made its intention clear to contest Judge Analisa Torres' recent ruling in the U.S. District Court for the Southern District of New York, which was issued last month. Subsequently, the SEC sought permission from the judge to pursue its appeal. Judge Torres granted the SEC the opportunity to present its case and set a deadline of September 1 for Ripple to submit its opposing arguments. The filing made on Friday serves as the SEC's response to Ripple's opposition memorandum.
In July, Judge Torres issued a ruling that found Ripple had violated federal securities laws in its sale of XRP to institutional investors. However, the judge's verdict was distinct when it came to retail investors, as she concluded that Ripple had not violated securities laws in their dealings with this group. Meanwhile, another judge within the same court, Judge Jed Rakoff, had a differing opinion on this matter when he presided over a separate case brought by the SEC. The SEC referenced this divergence in judgments in its initial memorandum and in its filing on Friday. These references were made as part of the SEC's effort to persuade Judge Torres to grant permission for what is known as an "interlocutory appeal." This type of appeal would allow an appellate court to address certain legal questions while the case continues to progress in the original court.
"'[Judge Rakoff] did reject this Court’s legal conclusion that the existence of 'blind' trading platform-based transactions precludes the application of Howey, as a matter of law, under virtually identical facts (sales of the crypto asset by the issuer to investors on a platform in blind bid/ask transactions)," the filing said.
If Judge Torres approves the SEC's motion, the SEC will be required to present its case to the Second Circuit Court of Appeals.
The SEC argued that resolving the legal disputes through the appellate court at this moment could ultimately expedite the case's resolution in the long run.