A federal judge reportedly denied the Securities and Exchange Commission’s (SEC) request to appeal a ruling regarding Ripple Labs’ cryptocurrency, XRP.
U.S. District Judge Analisa Torres ruled in July that XRP does not constitute a security when sold to the general public, which was seen as a blow to the SEC’s efforts to regulate digital assets, Bloomberg reported Tuesday (Oct. 3).
The judge’s July ruling drew a distinction between sales of XRP to institutional investors and sales to the public on exchanges. While sales to institutional investors were deemed to meet the criteria for an investment contract under federal securities law, sales to the public did not qualify as a security.
The SEC sought permission from Torres to appeal her ruling and put its suit against Ripple on hold during the appeal process, Bloomberg reported. However, both requests were denied Tuesday, setting the stage for a trial scheduled for April.
Ripple opposed the SEC’s request, arguing that the agency was rushing to appeal a legal question that applies to all cases involving digital assets. The company highlighted the differing factual and legal procedural postures of other SEC enforcement actions.
The SEC noted that another federal judge, Jed Rakoff, ruled in an SEC case against Terraform Labs and its founder that the Terra USD token may be a security when sold to retail investors — explicitly rejecting the approach Torres took in the Ripple case, according to the report.
Following the denial of the appeal, Ripple’s XRP token experienced a surge in value, climbing as much as 6.3%, the report said. Although it later settled near 54 cents, the token has seen a 58% increase in value this year, outperforming many other digital assets.
The July ruling in the Ripple case was a landmark decision that defeated many crucial elements of the SEC enforcement case against Ripple and dulled the sharp teeth of the SEC’s ongoing existential threat to the crypto industry in America, PYMNTS reported at the time. The ruling will have far-ranging repercussions across the digital ecosystem, which has long argued that its tokens do not represent securities contracts.
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