The United States Securities and Exchange Commission (SEC) has announced that it will file an interlocutory appeal against the judge’s ruling in the Ripple v. SEC lawsuit. The SEC is asking Judge Analisa Torres to allow a federal appeals court to review her decision regarding the sale of Ripple’s XRP token, which she deemed compliant with securities laws.
The SEC argued that the ruling has “substantial ground for differences of opinion” and that the outcome of the appeal would have “special significance” for its ability to enforce securities laws. However, pro-XRP attorney John Deaton has countered that the SEC’s argument is “extremely weak.”
Deaton Counters SEC’s Ripple Ruling Impact Concerns
Deaton pointed to the precedent set by the Rakoff decision in the Terra case, which contradicts the SEC’s argument. In that case, Judge Rakoff ruled that the SEC’s claim that Terraform’s crypto-assets were securities under the Howey test was plausible. The Howey test defines an investment contract where a person invests money in a common enterprise, expecting profits solely from the efforts of others.
Unlike Judge Torres in the Ripple case, Judge Rakoff did not differentiate between direct and secondary token purchasers, citing that Howey does not make such a distinction. Deaton argues that this shows that a District Court Judge can clearly differentiate between Judge Torres’ ruling, which was made based on a summary judgment after reviewing presented evidence, and other cases.
Deaton also suggests that if the SEC’s argument were accepted, it could be applied every time the SEC or any other governmental agency (like the CFTC, EPA, or DOJ) faces a loss in a lawsuit.
In the Ripple v. SEC legal scenario, John Deaton’s insightful response highlights weaknesses in the SEC’s stance. It will be interesting to see how the SEC’s appeal is ultimately decided.