SEC’s Appeal in Ripple Lawsuit: Why Experts Say It Was a Big Mistake

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U.S. Securities and Exchange Commission (SEC) pursued an interlocutory appeal after Judge Analisa Torres’ judgment favored Ripple. Greg Beuke, a prominent attorney with a passion for cryptocurrency, suggests the SEC might have misstepped with this move. Let’s get into it.

Misinterpreting the Ruling

The buzz created by the SEC’s appeal motion stemmed from a perceived misreading of Judge Torres’ decision. Contrary to the SEC’s interpretation, the ruling did not universally decide that programmatic sales could never be viewed as investment contracts. Instead, Torres specifically addressed that, in this instance, programmatic sales of XRP did not fall under the investment contract category. Her conclusion was drawn from the SEC’s inability to validate that XRP purchasers anticipated profit solely based on Ripple’s actions.

Where the SEC’s Argument Falls Short

Beuke keenly noted the SEC’s oversight in not furnishing concrete evidence supporting their stance. He expressed that the regulator’s heavy reliance on selective statements from Ripple and certain staff members did not suffice as concrete evidence. The absence of a direct testimony from even a single XRP holder, expecting gains from Ripple’s endeavors, further weakened their position.

Labeling the interlocutory appeal as a significant strategic blunder, Beuke detailed the potential pitfalls of this course. Typically, a post-final ruling appeal allows the appealing party some leeway in interpreting the decision. Yet, the nature of an interlocutory appeal leaves room for the Judge, in this case, Torres, to further elucidate her ruling. Beuke surmises that such clarifications could further undercut the SEC’s position by emphasizing their failure to meet the proof’s burden.

A Glimpse into the Appeal’s Future

The appeal court may have an initial inclination to side with the SEC’s foundational claim about XRP’s programmatic sales. However, Beuke strongly believes that the court will inevitably weigh Judge Torres’ decision, grounded in undeniable factual evidence, against the SEC’s unconvincing arguments.