On August 9th, a document was submitted to the U.S. District Court for the Southern District of New York, wherein Judge Analisa Torres, presiding over the SEC’s civil suit against Ripple Labs, announced plans for a jury trial in the second quarter of 2024. This trial will address the issues not decided in the motions for judgment.
In late 2020, the SEC launched a legal case against Ripple, including its CEO Brad Garlinghouse and co-founder Chris Larsen, accusing them of an unauthorized securities offering amounting to $1.3 billion via the sale of XRP tokens, established by Ripple’s co-founders in 2012. This legal action prompted numerous exchanges to delist XRP to sidestep potential legal complications.
Yet, on July 13th, Judge Torres stated that XRP transactions on open cryptocurrency exchanges could not be deemed securities offerings since purchasers did not foresee gains linked to Ripple’s endeavors.
This decision by Torres referenced a precedent set by the Supreme Court, which defines investments drawing profits from the collective efforts of others as securities.
Programmatic sales of XRP on cryptocurrency exchanges, including those by its executives and for employee rewards, were not classified as securities by the court.
While this decision doesn’t finalize the SEC vs. Ripple Labs case, potential violations could still place Garlinghouse, Larsen, and the entire blockchain company under scrutiny. In light of the ruling, many platforms have either reintroduced XRP or indicated plans to do so.
Based on the recent submission on Wednesday, Judge Analisa Torres affirmed that Ripple, along with Garlinghouse and Larsen, will face a jury trial. Both the defense and prosecution have until August 23rd to share their unavailable dates, with the trial tentatively slated for a window between April 1st and June 30th, 2024.
SEC to Appeal Judge’s Decision on Ripple’s XRP Sales Ruling
The U.S. Securities and Exchange Commission (SEC) has declared its plan to launch an “interlocutory appeal” following the recent court judgment concerning Ripple’s XRP sales.
Judge Torres’ determination that XRP sales on public cryptocurrency exchanges weren’t securities offerings has spurred the SEC into further action. The sentiments shared by SEC Chair Gary Gensler last month, expressing dissatisfaction over the verdict, highlight the regulatory body’s drive to contest the ruling.
While the SEC is set to challenge specific points of the judgment, other segments of the case will continue toward trial.
The essence of the interlocutory appeal is to request an appellate court’s assessment of rulings within the ongoing SEC vs. Ripple litigation. This could potentially obviate the necessity for separate proceedings for the SEC and the government.
The SEC, in a recent court document, stated, “The Court’s conclusion that Defendants’ ‘Programmatic’ transactions with XRP purchasers via cryptocurrency trading platforms, along with Ripple’s ‘Other Distributions’ in exchange for services and labor, were not offers or sales of securities warrants certification.” The regulatory body emphasized that “Interlocutory review is appropriate in this scenario.”
Additionally, the SEC pointed to internal disagreements within the Southern District of New York to strengthen its case for the interlocutory appeal.
The SEC underscored a notable contrast when Judge Jed Rakoff chose not to apply Judge Torres’ reasoning to the SEC’s proceedings against Terraform Labs and Kwon. This “intra-district split,” according to the SEC, clearly indicates substantial room for diverse interpretations.