So the drama between Ripple Labs and the US Securities and Exchange Commission continues,
The SEC is now looking to appeal a recent court ruling involving Ripple that was a bit of a setback for the regulator’s efforts to oversee cryptocurrency markets.
In a letter on Wednesday, the SEC asked Judge Analisa Torres to let a federal appeals court review her July decision that said Ripple’s sale of its XRP token followed securities laws when sold on public exchanges.
The regulator argued an appeal could address legal issues where there’s “substantial ground for differences of opinion” and that are particularly important for its ability to enforce securities laws.
The SEC sued Ripple, its CEO and chairman in late 2020, alleging they illegally raised over $1.3 billion through unregistered XRP sales. But Torres said buyers had no reasonable profit expectation from Ripple’s efforts when purchasing on exchanges.
Her ruling differed from another Manhattan federal judge who days later found the TerraUSD token did qualify as a security when publicly sold. The conflicting decisions create regulatory uncertainty.
While Ripple prevailed on the exchange sales issue, Torres did find it broke laws selling XRP directly to institutions. The judge must now decide whether to halt proceedings to allow the appeal.
Ripple has argued XRP serves a functional purpose versus being an investment contract, but the debate continues on which tokens deserve securities regulation.
SEC Chair Gary Gensler has brought over 100 crypto enforcement cases to rein in excesses he argues undermine market integrity. The Ripple appeal seeks to strengthen oversight powers the regulator says are vital.
The ruling does not directly affect the SEC’s separate lawsuit accusing crypto exchange Coinbase of illegally operating without proper registration.
This appeals case could have huge implications on the SEC’s ability to police crypto markets. One to watch closely!
XRP is down 2.4% on the day, currently trading at $0.6275.
