Ripple Labs, accompanied by its top executives, Brad Garlinghouse and Chris Larsen, has expressed its disagreement with the SEC’s request for an interlocutory appeal in court. Ripple contends that the current court ruling does not warrant such an appeal and is highlighting the SEC’s selective regulation of the cryptocurrency industry.
This selective approach raises concerns about how the SEC applies the Howey test, which is crucial in determining whether a digital asset is a security or not. This development holds significant consequences for the ongoing legal battle.
Part of the filing, as shared by attorney James K. Filan, reads, “The SEC identifies no prejudice that it would suffer in being required to try the allegations that it brought and has maintained against Mr. Garlinghouse and Mr. Larsen for nearly three years. And the SEC fails to even acknowledge, much less address, the considerable prejudice that further delay would cause to the Individual Defendants. The SEC’s half-hearted stay request lacks support in law, fact, or equity.”
Attorney Fred Rispoli opines that it’s unlikely Judge Torres will approve the SEC’s request. He argues that not only does the legal analysis support Ripple, but there’s also a significant concern regarding potential harm to individuals like Brad Garlinghouse and Chris Larsen, rather than just the company. He draws a parallel to the right to a speedy trial in criminal cases.
Rispoli stated, “It’s hard for me to see Judge Torres certifying the SEC’s request. Legal analysis weighs in favor of @Ripple, but I think the stand-alone reason to deny is the prejudice to BG & CL, actual humans and not a company. Similar analysis to the US right to a speedy criminal trial.”
He further suggests that the only scenario where Judge Torres might certify the appeal is if she views this case as highly political and prefers not to become deeply involved. In such a situation, she might opt to pass it on to the 2nd Circuit, allowing them to decide whether to approve the appeal, effectively leaving the decision in their hands. However, this approach is not favored by Judge Torres, according to Rispoli.
The SEC is seeking an interlocutory appeal, arguing that the Ripple case raises critical legal questions with broad implications for the entire digital asset industry. Ripple has responded with several counter-arguments.