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Judge Analisa Torres, who had in July 2023 delivered the historic Summary Judgment in the XRP Lawsuit, has denied the U.S. Securities and Exchange Commission’s (SEC) motion to file an interlocutory appeal. The denial reiterates the previous ruling that the retail buyers of the token were not expecting profits from Ripple.
Also Read: Ripple Makes Top 100 Fintech List for Cross Border Payments
US SEC Motion To Appeal Denied
In conclusion, the judge said the SEC’s motion for certification of interlocutory appeal is denied. Judge Torres observed that the US SEC had failed in its argument to sufficiently demonstrate that the interlocutory appeal, if approved, would “materially advance the ultimate termination of the litigation.” The judge stated that at the core of the SEC’s argument was about how the Court “improperly applied the Howey test” to the facts in the undisputed record. As the SEC has repeatedly argued, “Howey must be applied to the facts and circumstances at hand.”
Further, Judge Torres supported her argument that the question of the Howey test does not arise in this case. Quoting a 2009 lawsuit, she argued that the circumstances around the Howey test do not make it appropriate
for consideration to interlocutory appeal.
Further, the Court had categorically listed out several reasons as to why Ripple’s programmatic sales could not lead investors to reasonably expect profits from its own efforts, which is an essential condition as part of the Howey Test. Among the reasons considered is the lack of promises or offers to the programmatic buyers because Ripple did not know who was buying the XRP. Another reason mentioned was that many programmatic buyers were entirely unaware of Ripple’s existence.
Impact From Other Crypto Cases
In addition, the judge rejected the Commission’s argument that the “certified issues have precedential value for a large number of cases.” Here, the “precedential value” refers to various other lawsuits involving digital assets and different companies. The Court concluded that in case of the XRP Lawsuit Summary Judgment, the Court’s findings come from a direct application of Howey to the unique facts and circumstances of this case.
John Deaton, the attorney who represents the thousands of token holders in the lawsuit, reiterated the court’s findings that the decision was made based on circumstances around the Ripple lawsuit alone. He explained that the SEC failed to prove how Ripple tried to bring about a speculation of token price among buyers. Meanwhile, it remains to be seen how the XRP price would react considering the SEC’s rejection of motion to file an appeal.
“Law Of The Land”
Ripple Legal Chief Stuart Alderoty commented that the Summary Judgment delivered by Judge Analisa Torres on July 13, 2023 remains the law of the land. In the July 13 ruling, the judge gave Ripple a partial victory by stating that the programmatic sale of XRP tokens to retail buyers is not a security.
The Court’s July 13 ruling was, and remains, the law of the land. XRP is not a security. https://t.co/NxOXZZtSMG
— Stuart Alderoty (@s_alderoty) October 3, 2023
Investment Contract
Whether or not crypto assets are securities depends on how the assets are perceived from the lens of investment contracts conditions. US SEC Chair Gary Gensler is widely known for publicly calling almost all cryptocurrencies securities, much to the agony of the market participants. Yet, the XRP lawsuit judgment comes as a reasonable ground to say Gensler may have been wrong.
In the case of Ripple, the judge said the programmatic sales were not made “pursuant to contracts that contained lockup provisions, resale restrictions, indemnification clauses, or statements of purpose.” She commented that the SEC failed to provide evidence that Ripple did not promote bradly to the general public through its materials.
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