The Securities and Exchange Commission said it will appeal a judge's controversial Ripple Bitcoin and Ether due to its centralized structure, the case hinges on one of the central debates for the sector: whether cryptocurrencies should be regulated as securities or as commodities.
The judge's ruling, which found that XRP by itself does not constitute a security and that sales of XRP were only securities sales when made to sophisticated investors, appeared to be an opening for the rest of the industry. The SEC currently has active lawsuits against major exchanges such as Coinbase and Binance for offering unregistered securities. Torres's ruling, however, indicated that such programmatic sales would be outside the jurisdiction of the SEC.
The mid-July ruling was split, with Torres leaving some questions for a later jury trial, including whether two Ripple executives were liable for the unlawful offering and sale of securities. Earlier on Wednesday, she announced her intent to hold the trial in the second quarter of 2024. The fact that the case is not yet settled complicates the appeals process, prompting the SEC's motion to seek leave to file an interlocutory appeal.
In its letter filed on Wednesday, the SEC said that it would seek to stay the court's proceedings, including the scheduling order, during its motion and potential appeal. The agency argued that the order's ruling was of consequence to other pending litigation, including against Coinbase, Binance, and Huobi founder Justin Sun. The agency also noted that a different SDNY judge had exhibited "substantial ground for difference of opinion" on the question of programmatic sales in a separate case involving Terraform Labs, the developer of the failed TerraUSD stablecoin.
According to the schedule set forward in the letter, Ripple's response will be due Aug. 16, and the SEC will file its opening brief two days later. The appeal would be heard in the U.S. Court of Appeals for the Second Circuit.
