An attorney has shed light on four plausible actions that the U.S. Securities and Exchange Commission (SEC) may take in the aftermath of the ruling on the Ripple case involving XRP. He anticipates that the SEC will file a request for an interlocutory appeal within the next two weeks, arguing that such a step would serve the best interests of Ripple and the XRP community by initiating the appeal process sooner.
Possible Actions the SEC May Take in Ripple Case
Attorney James Murphy elaborated on the potential actions the SEC could take in the Ripple case in the wake of the verdict rendered by District Judge Analisa Torres concerning XRP. It’s evident from the SEC’s communications that they intend to appeal the court’s ruling.
“The debate regarding the SEC’s next move in the Ripple case is quite fervent. I am convinced that they’re contemplating at least four options,” Murphy started off. He pointed out that the SEC’s first option would be to file a “request for interlocutory appeal.” Murphy, who specializes in securities law, explained:
The absence of a final judgment means that the SEC lacks the exclusive right to appeal at present. It needs approval from both Judge Torres and the 2nd Circuit Court of Appeals to proceed with an interlocutory appeal.
For obtaining this permission, the SEC must demonstrate three things: “The ruling includes a controlling question of law,” there’s substantial grounds for differing opinions on that question, and “An immediate appeal could significantly expedite the litigation.”
Clarifying that “There’s no fixed timeline for the preliminary [appeal] request,” Murphy underlined that “it ought to be made swiftly,” suggesting that “30 days is a reasonable rule of thumb.” He added, “If Judge Torres concurs, the SEC will then have 10 days to petition the 2nd Circuit.”
Next, Murphy outlined the remaining three alternatives. Second, the SEC could move forward with a trial on the aiding and abetting claim against Ripple CEO Brad Garlinghouse and co-founder Chris Larsen, then file a standard appeal post-trial. The third alternative involves the SEC withdrawing the allegations against Garlinghouse and Larsen at this point and immediately filing an appeal. For this course of action, no permission is required. Lastly, the SEC could settle.
Murphy thinks the SEC will likely choose the first alternative due to significant political pressure on Gensler to overturn the Torres decision quickly and because the decision poses a significant threat to the SEC’s cases against several crypto exchanges, including Coinbase, Binance, and Bittrex. He emphasized:
The political factors cannot be ignored. Global crypto exchanges are re-listing XRP, which doesn’t reflect well on the SEC. Progressive Congressman Ritchie Torres and others are increasingly criticizing Gensler. This situation is proving embarrassing for Gensler and his supporters.
As for the option of settlement, Murphy deems it “improbable at this juncture.” He opined: “It’s tough to conceive the SEC settling with Ripple and leaving the Torres precedent unchallenged on appeal. The SEC’s entire ‘regulation-by-enforcement’ approach against the crypto industry relies on overturning the Torres ruling.”
He concluded: “In summary, I foresee the SEC filing a request for an interlocutory appeal within the next 2 weeks. I believe initiating the appeals process now — rather than a year later — would be in the best interests of Ripple and the XRP Community. I have faith in Ripple’s prospects on appeal.”
Frequently Asked Questions (FAQs) about SEC Ripple XRP case
What are the four potential actions that the SEC might take in the Ripple XRP case according to attorney James Murphy?
Murphy outlined four actions that the SEC could take. First, they could file a “request for interlocutory appeal.” Second, they could proceed with a trial on the aiding and abetting claim against Ripple’s CEO and co-founder, then file a regular appeal after the trial. The third option involves the SEC dropping the claims against Ripple’s leadership and filing an immediate appeal. Lastly, the SEC could settle.
What does the SEC need to show to get permission for an interlocutory appeal?
To get permission for an interlocutory appeal, the SEC must demonstrate three things: The ruling includes a controlling question of law, there are substantial grounds for difference of opinion on that question, and an immediate appeal may significantly expedite the litigation.
Why does Murphy believe the SEC is likely to take the first option?
Murphy believes the SEC will likely take the first option because there is significant political pressure on the SEC to reverse the Torres decision quickly, and this decision poses a substantial threat to the SEC’s cases against several cryptocurrency exchanges.
Does Murphy believe that a settlement between the SEC and Ripple is likely at this point?
Murphy deems a settlement between the SEC and Ripple improbable at this juncture. He thinks it’s hard to imagine the SEC settling without challenging the Torres precedent on appeal, as the SEC’s ‘regulation-by-enforcement’ approach against the crypto industry depends on overturning the Torres ruling.
What is the recommended timeline for the SEC to file a request for an interlocutory appeal?
While there’s no fixed deadline for an initial appeal request, Murphy suggests it should be made promptly, and a 30-day timeframe is a reasonable rule of thumb. If Judge Torres agrees, the SEC would then have 10 days to petition the 2nd Circuit.
More about SEC Ripple XRP case
- U.S. Securities and Exchange Commission
- Ripple XRP
- Interlocutory Appeal Explained
- Recent Developments in the Ripple Case
- SEC’s regulation-by-enforcement approach