Ripple has opposed the SEC’s request to file an interlocutory appeal while addressing Judge Rakoff’s decision regarding its victory.
Leading blockchain company Ripple Labs has filed an opposition to the SEC’s anticipated interlocutory appeal motion relating to the summary judgment decision by Judge Analisa Torres.
In an August 16 letter shared by seasoned lawyer James K. Filan, Ripple asked the court to reject the SEC’s anticipated motion for leave to file an interlocutory appeal.
— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) August 16, 2023
Ripple Opposes SEC Appeal Request on 3 Grounds
The defendants opposed the appeal on three grounds. Firstly, Ripple argued that the summary judgment decision laid down by Judge Torres on July 13 does not involve a controlling question of law.
Secondly, the leading blockchain company and its execs argued that the SEC could not show a substantial ground for a difference of opinion.
Thirdly, Ripple stated that an immediate appeal by the SEC would not advance the termination of the litigation.
It bears mentioning that an interlocutory appeal occurs when a court ruling is appealed while the case is still proceeding. The Ripple lawsuit still has pending issues- the SEC’s case against Brad Garlinghouse and Chris Larsen.
Notably, the SEC claims that Garlinghouse and Larsen were reckless in allowing Ripple to distribute XRP the way it did.
SEC Makes Interlocutory Appeal Request
Although there are still unresolved issues in the lawsuit, the SEC is requesting to file an interlocutory appeal. The SEC aims to appeal Judge Torres’ decision on Ripple’s programmatic sales of XRP and other distributions.
Meanwhile, the securities regulator will not challenge the ruling on Ripple’s sales of XRP to institutional investors. It will also not appeal to the non-security status of XRP.
Ripple lawyers argued that it is more appropriate for the SEC to appeal the court’s ruling after a final judgment.
Ripple Addresses Terra Judge Ruling
In an attempt to get its request approved, the SEC argued that there is a “controlling question of law on which there is substantial ground for differences of opinion.”
According to the SEC, there is already an intra-district split in the Ripple ruling, as seen in the SEC v. Terra lawsuit. As reported, Judge Jed Rakoff, the judge overseeing the Terra case, rejected Judge Torres’ logic in the Ripple ruling.
Judge Rakoff rejected the reasoning, stating that the Howey test does not distinguish between buyers as Torres did. Thus, the SEC used the ruling as a basis to seek approval for its interlocutory appeal request.
Fox Business journalist Eleanor Terrett highlighted how Ripple tackled Judge Rakoff’s decision.
In its letter, Ripple stated that its programmatic sales of XRP differ from Terra’s sales.
Ripple Labs referenced the SEC’s claim against Terra, showing how the company and its founder Do Kwon promised “rates of returns of 19-20% on the coin owners’ initial investment.”
🚨TLDR: Regarding the Rakoff v. Torres ruling, aka the "intra-district split", @Ripple distinguishes the way in which its programmatic sales differ to those of Terraform Labs, citing the @SECGov's allegations that the company and its founders promised “rates of returns of 19-20%… https://t.co/w2UW8uAR8L
— Eleanor Terrett (@EleanorTerrett) August 16, 2023
Furthermore, Ripple pointed out that Terra and its founder conducted a public campaign encouraging retail and institutional investors to purchase their crypto assets.
In contrast, in her summary judgment decision, Judge Torres found that Ripple did not make any promises or offers to retail investors during programmatic sales of XRP.
It added that the Terra judge also agreed with Judge Torres that digital asset sales alone are not inherently securities offerings.
Reaction Trail Ripple’s Opposition
As expected, the crypto community has been reacting to Ripple’s opposition to the SEC’s interlocutory appeal request. Reacting, pro-XRP lawyer John Deaton described Ripple’s response as “excellent.”
Excellent response. The even stronger argument will be coming next from @bgarlinghouse and @chrislarsensf’s attorneys related to the SEC’s request for a stay. If it wasn’t for the Rakoff ruling, I would lean toward Judge Torres denying the SEC’s request to file a motion for… https://t.co/59mspkDyT3
— John E Deaton (@JohnEDeaton1) August 16, 2023
However, he expects Ripple’s execs to make stronger arguments in their response to the request. Deaton said he would have speculated that Judge Torres would deny the SEC’s appeal request if Rakoff did not reject her logic.
“But with the Rakoff ruling out there, [Judge Torres] allowing the SEC to write a formal motion will give her an opportunity to further demonstrate why her decision is sound and BASED ON EVIDENCE,” Deaton added.
Attorney Jeremy Hogan also reacted to the development, stating that Ripple made solid arguments.
Ripple makes solid arguments why the appeal shouldn't be allowed.
But if it IS allowed, Ripple is going to get its "contractual obligations" argument in front of the 2nd DCA and THAT will be something.
— Jeremy Hogan (@attorneyjeremy1) August 16, 2023
He noted that if the SEC’s interlocutory appeal is allowed, Ripple will get its “contractual obligations arguments in front of the Second District Court of Appeal. Attorney Hogan speculated that multiple amicus briefs would be filed in the case.