Ripple, the company behind the XRP cryptocurrency, is fighting back against the US Securities and Exchange Commission (SEC) in a legal battle that could have far-reaching implications for the crypto industry.
The SEC has accused Ripple of offering unregistered securities to the public through its XRP token sales, which the agency claims are investment contracts under federal law. Ripple denies this allegation and argues that XRP is a digital asset that functions as a medium of exchange and not a security.
Recently, the SEC filed a request to appeal a ruling by US District Judge Analisa Torres, who found that XRP was not a security when sold to retail investors on exchanges.
The judge drew a distinction between Ripple’s sales of XRP to institutional investors, which she said met the test for an investment contract, and sales to the public on exchanges, which she said did not.
The SEC claims that this ruling is erroneous and could affect other cases involving cryptocurrency, including similar suits against Coinbase and Binance.
Ripple has opposed the SEC’s request, saying that the agency is “rushing to appeal” a legal question that applies to every case involving digital assets, while ignoring the factual and procedural differences of each case.
Ripple also says that the SEC needs the judge’s permission to appeal her ruling because it was not a final judgment.
Ripple argues that the public interest favors moving ahead to trial rather than delaying the case with an extraordinary appeal. Ripple’s CEO Brad Garlinghouse and Chairman Christian Larsen, who are also defendants in the case, have also supported Ripple’s opposition motion, saying that the judge was “entirely right” in her ruling.
The outcome of this case could have a significant impact on the future of crypto regulation in the US, as it could set a precedent for how digital assets are classified and treated under securities law.
The crypto industry has been seeking clarity and guidance from regulators on this issue, as it could affect innovation and adoption of blockchain technology.
The case is expected to go to trial in early 2024.