US Judge Rejects SEC's Appeal of $XRP Ruling in Ripple Case

Federal Judge Denies SEC's Bid

In a significant twist in the ongoing legal battle between the U.S. Securities and Exchange Commission (SEC) and Ripple Labs, a federal judge has dealt a major blow to the SEC's enforcement efforts. 

On Oct. 3, U.S. District Judge Analisa Torres in Manhattan rejected the SEC's appeal, cementing her previous decision regarding Ripple's XRP digital token. 

Last July, Judge Torres ruled that the sale of Ripple's XRP on public exchanges was in compliance with federal securities laws. Her reasoning hinged on the belief that purchasers of XRP did not harbor any reasonable expectation of profit based on Ripple's efforts. 

This ruling was a watershed moment, as it challenged the SEC's jurisdiction over cryptocurrencies, which had long been a source of debate and contention in the crypto community.

Moreover, Judge Torres stressed that her decision did not contradict another US District Judge's stance, Jed Rakoff, who stated on July 31st that the SEC had a plausible claim that Terraform Labs' Terra USD token was a security when sold on public exchanges. 

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Trial Set for April 23, 2024

With the appeal option now off the table, both Ripple and the SEC are gearing up for a high-stakes trial scheduled for April 23, 2024. The verdict, in this case, has the potential to reshape the regulatory landscape for cryptocurrencies. It will likely set a precedent for how digital assets are classified and regulated in the United States and beyond.

According to Judge Torres' previous ruling, certain programmatic sales of Ripple's cryptocurrency XRP did not violate securities laws due to a blind bid process. She, however, deemed other direct sales of XRP to institutional buyers securities in a split verdict that left the SEC partially satisfied. 

Seeking to overturn Judge Torres's July decision, the SEC expanded its appeal to include other XRP distributions where the cryptocurrency was exchanged for goods or services. 

In response, Ripple argued that the conditions required for an interlocutory appeal were not met. They highlighted two primary reasons for their opposition: the absence of a controlling legal question and the SEC's dissatisfaction with the court's application of the Howey test to most XRP transactions. 

Following the announcement, the price of the price of XRP increased by 6.6% in minutes, currently trading at $0.5301.