Gary Gensler Refuses to Reveal Whether SEC Will Appeal Ripple’s Victory

SEC Chairman Gary Gensler has refused to disclose whether the agency plans to appeal Judge Torres’ decision on the Ripple case.

SEC Chairman Gary Gensler has chosen not to disclose the regulatory agency’s next move in the Ripple case. In an interview yesterday, Bloomberg reporter Kailey Leinz asked Gensler to comment on whether the SEC plans to appeal Judge Torres’ decision, especially as regards the ruling on Ripple’s programmatic sales.

The reporter raised the question after Gensler said last week that the SEC is disappointed with the ruling on retail investors. Furthermore, the SEC also noted in a motion filed in the TerraForm Labs’ case that it is considering multiple options to seek review.

Consequently, the reporter asked Gensler to clarify whether the SEC would appeal Judge Torres’ ruling.

“A ruling that was made in the Ripple case that XRP is only a security when sold to institutional investors, not so with retail investors. I know you’ve previously said you were disappointed by that ruling [and] the SEC also said that it intends to seek further review. Does that mean you’re going to appeal it? Can you elaborate on your thoughts around that ruling?”

Gensler Responds

In response, Gensler said the commission had not decided on its next action. Gensler stated that he is one out of 5 commissioners. Hence, he has no right to decide whether the SEC will appeal the ruling. Furthermore, Gensler said the SEC will discuss recommendations made by the staff.

Bloomberg TV just interviewed Gensler for ~10 minutes. Obviously crypto was a topic. But Gensler didn't really give a ton of meaningful or new insight. He *mostly* refused to discuss specifics for the ripple case or for #Bitcoin ETF filings. Good job @kaileyleinz & @daniburgz pic.twitter.com/rynbfeOHto

— James Seyffart (@JSeyff) July 27, 2023

“I’m one of five commissioners. The commissioners have not acted on that [deliberate on whether the SEC should appeal]. If the staff makes a recommendation, we will have a discussion of it, and we’ll take it up there. I don’t have anything more on that,” Gensler added.

Growing Debate About SEC’s Next Move

It is worth noting that there has been a heated debate about what the SEC will do next in the Ripple case. Many people believe the SEC will appeal the ruling to overturn the decision.

Some experts speculate that many crypto companies could use the Ripple ruling as a legal precedent to argue that their tokens are not securities. TerraForm Labs and its founder, Do Kwon, have referenced the judge’s ruling as a legal precedent in their ongoing legal tussle against the commission.

With many companies expected to make similar moves, the SEC could try overturning Judge Torres’ decision via appeal. However, appealing the ruling could be disastrous for the SEC if the Second Circuit affirms Judge Torres’ decision.

In this scenario, the entire Second Circuit will be governed by that decision, thus ending SEC’s regulation by enforcement agenda in the crypto space.