Things started to get complicated in the lawsuit between Ripple (XRP) and the SEC. It was learned last night that the SEC will appeal Judge Torres' decision that “XRP is not a security when sold on exchanges”.
Lawyer James A. Murphy shared his thoughts on what could happen next in the case.
Murphy has outlined three possible scenarios for Ripple:
- Option 1: Dispute the request for confirmation of the appeal. Ripple could argue that an interim appeal would be a waste of time and resources, given that Judge Torres' decision was correct and that there is a high probability of another appeal after the hearing.
- Option 2: Agreeing with the SEC that an appeal is appropriate. This option may seem unlikely, but Murphy said it wouldn't surprise him. He explained that in this case the appeal was inevitable, so the real question was whether the appeal would start now or later. By accepting the appeal, Ripple could potentially speed up the resolution of the case and avoid a lengthy hearing.
- Option 2A: It may agree that the interim appeal is appropriate, but adds that corporate sales, the only point the SEC wins, must also be approved for cross appeal by Ripple. Murphy said this option would make sense because if Ripple wins the cross-appeal, there would be no need for a penalty phase and a hearing on aid and abetting.
Murphy said he thinks Ripple will opt for option 1 and oppose his appeal. He cited three reasons for this:
- Ripple does not want to admit that there are “significant grounds for disagreement” regarding Judge Torres' decision, which is part of the legal standard for appealing. Ripple's position is that Judge Torres' decision is clearly correct and consistent with decades of precedent.
- There is a small chance that a new cryptocurrency law will pass Congress and change the legal environment for XRP. Such a law could potentially exempt XRP from being classified as a security based on its characteristics and use cases.
- There is also the possibility that in 2025 a new administration will take office with a different approach to crypto regulations. The new management can either dismiss the lawsuit or settle with Ripple on favorable terms.
Murphy said he believes it will soon be clear whether Judge Torres will grant the SEC's interim appeal. He stated that he will give his final estimate after the briefing on the request, which is expected to take about a month, is completed.
*Not investment advice.