Legal Experts Predict SEC Will Appeal XRP Ruling

Legal experts, including former SEC attorneys, believe an appeal is likely, citing concerns about inconsistencies in rulings related to programmatic XRP trading.

The US Securities and Exchange Commission (SEC) has six more days to appeal the XRP lawsuit amid its high-profile ongoing legal battle with blockchain firm Ripple.

Reports suggest that the SEC might challenge the July 2023 ruling by US District Judge Analisa Torres. This ruling stated that only some sales of XRP violated the securities laws.

Ripple later agreed to a $125 million settlement with the securities regulator. Many view this ruling as a significant victory for the crypto industry, showing that digital assets do not violate US securities laws, as opposed to the SEC's thinking.

Speaking to Fox Business, former SEC lawyers stated that an appeal is likely, with the agency unwilling to give up its dominance in the crypto industry. Marc Powers, a former SEC enforcement attorney, said:

"I believe the SEC will appeal. I would think it would not want to have the programmatic trading analysis stand. It creates inconsistency in district court judges' and Second Circuit rulings."

Another SEC lawyer, who preferred to remain anonymous, noted that the decision is flawed and legally unsound and should be appealed. "I believe most securities lawyers, regardless of their stance on crypto, would agree that it wasn't a widely respected ruling," the lawyer noted.

Crypto Industry Lawyers Disagree

On the other hand, the lawyers representing the crypto industry strongly disagree. They believe that the US SEC would be wasting its resources significantly with a greater possibility of losing. Jeremy Hogan, a partner at the law firm Hogan & Hogan, said:

"Of course, the SEC thinks the opinion is wrong - they were on the losing side. The SEC should be thinking of whether an appeal furthers its mandate of investor protection and capital formation."

SEC Faces Criticism on Crypto Regulatory Enforcement

Several US lawmakers have slammed the securities regulator chair Gary Gensler for adopting a regulation-through-enforcement approach. During the House of Financial Services Committee meeting last week, Gensler could not answer some tough questions from Republican lawmakers.

Hogan explains that since the Ripple case encompasses a broader set of facts and circumstances beyond just programmatic XRP sales, it might not be the best case for the SEC to appeal if its goal is to target those sales specifically. Marc Fagel, a former SEC attorney, said the regulator should focus on going after top exchanges instead of Ripple.

"Ripple is just a single issuer, while exchanges present a much broader systemic risk to investors, and the legal landscape is much more up in the air.

The agency needs to decide what is the best case to present to the Second Circuit—is it the Ripple case, or should the SEC hold off for now and wait for an exchange case like Coinbase to appeal, which would have a better chance at putting the secondary sales issue squarely before the court?" he noted.