US District Judge Analisa Torres has rejected the US Securities and Exchange Commission’s (SEC) to appeal part of the judge’s decision in its lawsuit against enterprise blockchain firm Ripple Labs regarding the sales of XRP.
Judge Torres determined in July 2023 that a part of Ripple’s institutional sales of XRP had been deemed as unregistered securities offerings – which is in violation of appicable federal laws.
But the Judge also stated that other XRP distributions by Ripple would not qualify as securities transactions, as per applicable laws.
In response to this, the SEC had appealed part of Torres’ ruling, stating that it would be establishing a problematic precedent for applying securities laws to digital assets. Now though, Torres has proceeded to deny the US SEC’s appeal, while noting that the agency had not met the requirements for an early appeal prior to the scheduled trial dates.
Judge Torres explained that if a buyer purchases XRP from the exchange with the “intention” of later selling XRP for a profit, then she would have purchased XRP with an “expectation” of profit. However, that particular motive was not actually derived from the entrepreneurial and/or managerial efforts of other parties.
This latest denial of the SEC’s appeal may be considered a win for Ripple, which has now been dealing with this lawsuit for a number of years. The lawsuit argues that Ripple had violated applicable investor protection laws by selling more than $1.3B in XRP beginning in 2013, but without actually registering such offers and sales of the XRP token.
At the time of writing, the SEC had not provided any detailed comments regarding this particular court ruling. At present, it remains unclear if the agency will aim to appeal this ruling any further.
But the denial of the motion to appeal indicates that the case should go to trial, which is expected to commence in April 2024.