The United States Securities and Exchange Commission (SEC) has filed an appeal seeking to overturn Judge Analisa Torres ruling that the cyrtocurrency Ripple (XRP) is not a security.
In mid-July, the judge ruled that XRP was not a security. In a Sep. 4 filing in the US District Court for the Southern District of New York, Ripple’s lawyers wrote that the SEC had agreed to a request to delay payment of the $125 million fine until after the time to appeal expires or any appeal is resolved. At the time this fine was imposed, Ripple Labs chief legal officer Stuart Alderoty wrote:
“This is a victory for Ripple, the industry and the rule of law. The SEC’s headwinds against the whole of the XRP community are gone.”
Many at the time viewed this filing as proof that Ripple expected the regulator to appeal the judge’s decision. Now, an Oct. 2 filing reveals that the SEC did indeed appeal the ruling that secondary sales of Ripple’s XRP did not constitute securities sales.
The ruling
Judge Torres ruled in July that XRP was not a security in and of itself because digital assets do not meet all the conditions of SEC’s Howey test investment contract classification. For this reason, she also ruled that secondary sales cannot be labeled as unregistered security sales, nor can early institutional investor sales.
On the day the SEC filed its appeal against the decision, the regulator’s chief enforcement officer Gubir Grewal also announced that he would step down on Oct. 11. According to the announcement, he led the SEC in a large number of enforcement actions against the crypto industry:
“Under Mr. Grewal’s leadership, the Division recommended and the Commission authorized more than 100 enforcement actions addressing widespread noncompliance in the quickly growing crypto space.”
The SEC has yet to name Grewal’s replacement. Meanwhile, the regulator’s enforcement division’s deputy director Sanjay Wadhwa was chosen as the interim chief enforcement director.
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