SEC’s Reply Memo in Ripple Case: A Laughable Strategy or a Clever One?
In a surprising turn of events on Friday, the U.S. Securities and Exchange Commission (SEC) made a 29-page filing in a bid to seek an interlocutory appeal to pause the entire case against Ripple. The SEC’s argument centers around its claim that Ripple is deliberately prolonging the case to maintain XRP sales, even after filing an appeal that could further extend the legal proceedings.
What is the SEC Upto Now?
John Deaton, the Lawyer and founder of CryptolawUS, commented that the SEC’s recent actions, including filing an interlocutory appeal and a motion for a stay, are not only contradictory but also counterproductive to their own claims of seeking a swift resolution.
He stated, “The SEC’s professional embarrassment continues,” accusing the regulatory body of wasting judicial resources rather than conserving them.
James K. Filan added to the dialogue. He points out that the SEC’s argument appears inconsistent and raises questions about the agency’s approach to the case. He likens it to previous controversial arguments made by the SEC, such as claiming that William Hinman’s speech was not guidance and asserting attorney-client privilege for Hinman’s communication.
“The SEC’s argument that Judge Torres should stay the proceedings because the SEC is suddenly concerned about conserving judicial resources is laughable.”
The Howey Test Remains Front and Center
At the core of this lawsuit is the SEC’s application of the Howey Test to determine whether XRP, Ripple’s native token, constitutes a security. In a somewhat surprising claim, the SEC posits that Ripple’s defense did not cite a single Howey-related opinion to contest the legal questions involved in the case.
As John Deaton points out, the pursuit of an interlocutory appeal itself stands to add a procedural layer to an already complex case. He predicts that the agency will inevitably lose ground, especially when it comes to applying the common enterprise factor to programmatic and secondary sales of XRP. Judge Torres is likely to uphold her decision, and the SEC will face another setback.
The Real Victims are the XRP Investors
What’s glaringly absent in this unfolding drama are the real victims: millions of XRP investors. As Ripple’s XRP remains in a state of uncertainty due to the ongoing legal disputes, the SEC appears unfazed by the fallout. Gary Gensler and his SEC team seem to have little concern for the widespread impact their actions are having on market stability and investor trust. And isn’t this all supposed to be to protect the users? A little contradictory, don’t you think?
As the SEC vs. Ripple case unfolds, the SEC’s latest maneuver appears to be causing harm to investors instead of safeguarding their interests. The cryptocurrency industry is in dire need of regulatory clarity, especially considering the growing scrutiny it faces.