SEC Appeal Request in Ripple Case May Not Be Granted: Former SEC Official

Marc Fagel thinks the odds are against the SEC in its quest to get the court to approve its interlocutory appeal request.

Former SEC official Marc Fagel has expressed doubt about the court certifying SEC’s interlocutory appeal request in the ongoing Ripple case.

For context, an XRP enthusiast took to the X platform over the weekend to specifically ask Fagel whether he thinks the SEC’s interlocutory appeal will be granted.

The user enquired whether conflicting rulings and novel areas of law could act as key factors in determining the approval of the SEC’s interlocutory appeal.

Fagel’s Response

Responding, Fagel noted that meeting the specific requirements for an interlocutory appeal is difficult. However, he stressed that the odds are against the SEC’s interlocutory appeal request unless the court considers the two factors raised by the user.

I agree with those points, and think they should factor in. However, the specific requirements for interlocutory appeal are hard to meet. I think the odds are against granting the request unless the court looks to the points you raise.

— Marc Fagel (@Marc_Fagel) September 9, 2023

Fagel made the comment after the SEC filed a memorandum reply to support its motion for an interlocutory appeal.

SEC Seeks Interlocutory Appeal

According to the SEC, the court’s July 13 summary judgment decision on Ripple’s programmatic sales of XRP and other distributions poses “knotty legal problems” that prompted the US Congress to make provisions for interlocutory review.

It bears mentioning that the court found both Ripple’s programmatic sales of XRP and other distributions as non-securities.

However, the SEC believes the rulings pose controlling questions of law, thus creating room for different opinions. The commission said this difference of opinion has already been reflected in the SEC v. Terra case, where a district judge rejected Judge Analisa Torres’ reasoning in the Ripple case.

As reported earlier, Ripple filed an opposition to the SEC’s motion to certify an interlocutory appeal. Notably, the leading blockchain company said it will file a cross-appeal on the court’s decision on its institutional sales of XRP.

Recall that the court found that Ripple violated securities laws via its past sales of XRP to institutional investors.

Necessary Requirements for an Immediate Appeal 

An interlocutory appeal is an appeal filed by a party while other parts of the case are still proceeding. For the SEC to file an interlocutory appeal, it needs to seek permission from Judge Analisa Torres and the Second Circuit.

Additionally, the SEC must satisfy three essential requirements, including showing that Judge Torres’ order has a controlling question of law.

The regulator also needs to show that there is substantial ground for differences of opinion. Lastly, the SEC must prove that an interlocutory appeal may advance the litigation materially.

At press time, Judge Torres has not issued her decision on the SEC’s motion for an interlocutory appeal. If the request is granted, the SEC must also seek permission from the Second Circuit.