The legal battle between Ripple Labs and the US Securities and Exchange Commission (SEC) is further unfolding as the latter’s pursuit of an interlocutory appeal becomes a critical nexus of contention. Ripple has filed it’s opposition to the SEC’s anticipated motion for leave to file an interlocutory appeal yesterday.
Chief Legal Officer (CLO) Stuart Alderoty stated via Twitter: “We oppose the SEC’s request for an interlocutory appeal. There is no extraordinary circumstance here that would justify departing from the rule requiring all issues as to all parties to be resolved before an appeal.”
Ripple’s Opposition Detailed
In their effort to counter the SEC’s motion for an interlocutory appeal, Ripple and its co-defendants Bradley Garlinghouse and Christian Larsen make several nuanced arguments:
To start, the company takes issue with the very nature of the SEC’s appeal. They postulate that the SEC hasn’t distinctly raised what could be considered a “pure” legal question. Instead, they assert, the appeal deeply entangles the application of the Howey test to a specific array of facts, which, in their estimation, is inappropriate for the kind of consideration an interlocutory appeal demands. This assertion challenges the foundational reasoning of the SEC’s appeal, suggesting it might be built on shaky ground.
A significant portion of the opposition targets the SEC’s historical and current position on the case. They underline that the SEC, for a long duration, viewed their case as a straightforward application of the Howey test. Just because the SEC now finds itself at odds with a court’s interpretation doesn’t birth a fresh legal query. This is further bolstered by Ripple’s mention of other cases, like Terraform Labs and Zakinov, to drive home the point that there isn’t a manifest conflict in legal opinions, contrary to what the SEC might suggest.
Diving into the potential outcomes, the fintech emphasizes a pivotal fact: even if the SEC were to find favor with their appeal and subsequently secure a win, this wouldn’t spell the end for the litigation. Ripple points out the looming presence of unresolved issues, chief among them being Ripple’s fair notice defense and the ever-present question of damages. This suggests that the litigation, far from being simplified, could turn into a protracted legal affair.
Lastly, Ripple’s legal minds offer a broader perspective, touching upon the consequences of entertaining the SEC’s request. They express concerns over fragmented appeals, alluding to the legal system’s general disinclination towards such practices. In their assessment, heeding the SEC’s appeal request might inadvertently catalyze a spate of multiple piecemeal legal skirmishes, complicating the landscape even further.
Ripple Is In A Favorable Position
The staunch opposition to the SEC’s motion and the subsequent wave of comments from legal experts suggests that the crypto company is acting from a position of strength, regardless of the immediate results.
Jeremy Hogan, a voice deeply respected in the XRP community, offers an intriguing viewpoint: “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, potentially leading to Amicus Briefs raining from the heavens.”
Another trusted voice, XRP community attorney John E Deaton, brings clarity by reminding the community of procedural specifics: “Judge Torres allowing the SEC to file a formal motion doesn’t mean that she is agreeing to allow it to appeal. The immediate issue is only whether she allows the SEC to write a more detailed motion.”
These commentaries suggest that regardless of the immediate outcome, Ripple is positioned to advance their arguments even further, potentially to a more influential audience. Hogan’s remark on the possibility of Ripple presenting its “contractual obligations” argument at the 2nd District Court of Appeals underscores a key strategic advantage: By being granted the appeal, Ripple may get the opportunity to highlight issues on a larger stage, setting strong precedents. Thus, Ripple can’t lose.
At press time, the XRP price is down 2.8% in the last 24 hours, trading at $0.5926.
Featured image from Gamma Law, chart from TradingView.com