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SEC To Appeal Ripple Ruling
The SEC wants to appeal last month's ruling in its case against Ripple, with significant implications for the crypto industry.
Following Ripple Labs' partial victory in the SEC's case against them last month, the regulator now plans to appeal the ruling.
Judge Torres ruled that secondary sales of XRP made on exchanges to retail investors did not constitute offerings of unregistered securities. (Initial, direct sales of XRP to institutions were ruled to have constituted securities sales.)
Although this was not all good news for Ripple, the ruling was taken as a major victory for the wider crypto space, since it makes it more likely that ETH and many other cryptos should be categorized as commodities, not securities. Immediately after the ruling, Coinbase and other major exchanges relisted XRP.
The Battle, Not The War
The SEC has now requested permission to appeal that judgment. Their argument focuses on whether secondary crypto sales on exchanges imply the expectation of profit based on third-party efforts—a point which goes to the heart of the definition of a security, and that is relevant in several other current crypto lawsuits.
Crypto lawyers believe that Ripple Labs is in a strong position, due in part to the knots in which the SEC has tied itself when fighting its corner.
Should the SEC be successful in their appeal, there will be significant consequences for exchanges, and particularly for the agency's case against Coinbase, regarding its ETH staking-as-a-service platform—which the SEC claims is an unregistered securities offering. Interestingly, however, the SEC did not continue to claim that XRP is a security, in and of itself.
Ripple has to respond to the SEC's motion by September 1. Should Judge Torres approve the appeal, the regulator would then need to appeal to the Second Circuit Court to continue proceedings.
Since the original ruling, Ripple has seen renewed interest from traders and partners alike, including as a CBDC infrastructure provider.
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