The cryptocurrency industry was thrilled when Ripple received a partial ruling that cleared it of being classified as a security when sold on crypto exchanges to retail buyers. This news created a buzz throughout the industry, marking a significant shift. It was a groundbreaking moment for the industry as a crypto company had finally won a legal battle in court.
Ripple Labs celebrated the news with a post on the X platform, saying, "XRP is not a security.
This victory for @Ripple is a win for the entire industry and a step toward regulatory clarity in the U.S."
However, it seems the crypto industry is back, awaiting another court judgment after the SEC revealed their intention to appeal the SEC and Ripple lawsuit. According to a letter dated August 9, 2023, addressed to Judge Analisa Torres, the Securities and Exchange Commission wants a judge to review the SEC and Ripple lawsuit. Apparently, the type of appeal the SEC wants is called an interlocutory appeal.
While positioning their case for the review, SEC said in the letter, "Interlocutory review is warranted here. These two issues involve controlling questions of law on which there is substantial ground for differences of opinion, as reflected by an intra-district split that has already developed."
Why is the SEC Making this Appeal
The Securities and Exchange Commission is making this appeal based on many grounds. But the one that stands out is that they want legal clarification from the judge on substantial evidence for differences of opinion.
In other words, the SEC wants to get more clarity from the judges regarding whether they are not making a mistake by declaring XRP non-security. Furthermore, the SEC pointed out some recent cases in the crypto industry where law courts termed crypto sold in exchanges as securities.
One of their examples can be traced to Judge Jed Rakoff’s order on the SEC v. Terraform Labs lawsuit. In the order involving Terraform Labs, they had tried to use the SEC and XRP ruling as a basis for not being a security. However, the judge presiding over the case kicked it out. In other words, the judge presiding over the Terraform Labs case says Judge Analisa Torres’ July 13 decision on the Ripple Case wasn't substantial evidence.
In addition, the Howey test has already been applied, and it has been established that cryptocurrencies sold on exchanges may be classified as security assets. The Securities and Exchange Commission is urging the judge to take into account the potential impact of their decision on other cases they are currently pursuing. If the ruling is upheld on July 13th, it will establish a precedent for all future cases, which the SEC is trying to avoid. Therefore, they are appealing the decision.
The SEC Continues Hitting Hard on Crypto Firms
The SEC continues to press the gas pedal in their quest to regulate the crypto industry in the United States. One of the issues the country has is the issue of regulation. Many crypto firms in the country say the Securities and Exchange Commission doesn't provide enough clarity on the rules it made.
An unfriendly environment like this makes many crypto firms settle in more favorable locations, such as Dubai. Recently, even Binance announced a new license allowing them to operate in the location.