- Cases against Binance and Coinbase could be impacted by the appeal
- XRP can be a security if sold to institutional investors
A month after Judge Analisa Torres ruled Ripple Labs’ XRP is not a security when sold to retail investors, the Securities and Exchange Commission (SEC) is moving to appeal, leading media reported.
The ruling was a big victory for the crypto industry. However, the regulator wrote in an Aug. 9 letter to Judge Analisa Torres, who presided over the case, that her decision should be reviewed by a court of appeal. In the period running up to the decision, XRP price predictions were quite positive.
Outcomes of many other lawsuits potentially affected
The SEC asked the judge to put the case on hold while appeal proceedings transpire. Depending on its outcome, many other pending court cases could be impacted. The regulator is suing a number of crypto companies over purported securities violations, including Coinbase and Binance.
The SEC wrote in the letter:
Interlocutory review is warranted here. The issues involve controlling questions of law on which there is substantial ground for differences of opinion as reflected by an intra-district split that has already developed.
The regulator added they were looking for justification for the court’s reasoning that Ripple’s planned XRP sales and offerings on crypto exchanges as well as individual sales were not securities.
The SEC also drew attention to a court decision in its lawsuit against Terraform Labs, under which Torres’ ruling was rejected. According to this decision, cryptocurrencies available on exchanges could also be securities.
When can XRP be a security?
Torres ruled that the XRP token was not a security in itself, but that its sale could constitute one of a security in certain circumstances, like if sold to institutional investors. However, it can’t be one when sold to retail investors on exchanges.
Following the release of the Hinman documents on June 13, it emerged Ripple founder Chris Larsen and CEO Brad Garlinghouse had made more than $600 million from selling XRP, but it’s not clear to whom.
