- Ripple argues that SEC did not fulfill the requisites of the Howey test
- Ripple contends that the appeal must be centered around a pure question of law
In a recent development within the ongoing legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC), Ripple’s legal team has contested the SEC’s motion for leave to file an interlocutory appeal. An interlocutory appeal refers to an appeal that is made before a trial or legal proceeding has concluded. It occurs when a party seeks to challenge a specific ruling or decision of a court during the course of ongoing litigation, rather than waiting until the entire case has been resolved.
This move comes as Ripple’s lawyers assert that the SEC has not met the necessary criteria for such an appeal. The crux of Ripple’s argument lies in its claim that the SEC did not fulfill the requisites of the Howey test, particularly concerning the distribution of Ripple’s digital asset, XRP. Ripple’s lawyers contend that this presents a “legal question” that requires proper resolution before an interlocutory appeal can be entertained. An interlocutory appeal is an appeal made during an ongoing case, typically granted under specific circumstances.
Ripple’s legal representatives argue that the SEC’s request should be reconsidered after a final judgment has been reached, with a complete record of proceedings. This approach, according to Ripple’s legal team, ensures a more comprehensive and informed decision-making process.
The legal maneuvering extends to Ripple’s three primary counterarguments against the SEC’s motion. Firstly, Ripple contends that the appeal must be centered around a pure question of law, and the SEC’s request does not introduce new legal issues necessitating review.
Secondly, Ripple’s lawyers assert that the SEC’s assertion of an incorrect ruling by the court is insufficient to warrant an appeal, emphasizing that a clear conflict between two courts must be demonstrated – a condition not met in this case. Lastly, Ripple’s legal team asserts that an immediate appeal will not expedite the resolution of the litigation proceedings.
Stuart Alderoty, Ripple’s Chief Legal Officer, emphasized that there is no “extraordinary circumstance” that justifies departing from standard legal procedure. Alderoty underlined, “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.”
The legal clash originated in 2020 when the SEC lodged a $1.3 billion lawsuit against Ripple, alleging the sale of unregistered securities (XRP) and misleading investors. A recent partial ruling by a federal district judge acknowledged that the programmatic sales of XRP to retail investors did not meet the criteria of securities. However, the judge did recognize that contracts worth $728 million for institutional sales did constitute unregistered securities sales.