Attorneys Christy Warner and James Murphy (@Metalawman) discussed the SEC appeal on the Crypto Law channel. In the Ripple case, Judge Torres ruled that only sales to institutional investors constitute unregistered securities. She clarified that XRP itself is not a security, nor are sales between individual holders without Ripple involved.
He said the SEC was particularly upset with the ruling that XRP is not a security, which is why he sought to appeal it during the lawsuit. It’s no surprise that they filed a notice of appeal last week, which begins the next step in the process. Now that the SEC has filed an appeal, you’ll need to fill out some forms to move forward.
Overview of appeal procedure
James explained that Ripple’s situation is not typical and we are following a standard appeals process. Once a Notice of Intent to Appeal is filed, the appellant must complete certain forms within 14 days. This form should include details about the attorneys involved, the nature of the appeal, and the specific issues in dispute. You should expect to receive this form within 14 days of the notice of appeal filed last week.
Main issues at the appellate court
Two major issues may arise on appeal. The first is whether secondary market transactions initiated by Ripple or its executives are considered investment contracts. Judge Torres ruled otherwise, but the SEC disagrees.
The second issue revolves around the lack of a disgorgement award, which means the return of profits gained from wrongdoing. The Second Circuit Court of Appeals previously held that for disgorgement to be granted, there must be an identifiable victim who has suffered economic loss. The SEC was unable to produce such a victim, which is surprising after four years of litigation.
Also read: Ripple vs. SEC News: Answers to key questions about settlement odds and potential SEC delays
complex legal issues
In reality, retail XRP holders appear to have been adversely affected by the SEC’s actions, while large institutions have suffered no harm. And there are more complex aspects to the disgorgement issue, he said. In a case known as Govil, a three-judge panel of the Second Circuit ruled that disgorgement does not occur unless victims of securities violations have suffered economic loss. did. The ruling puts them at odds with the 5th Circuit Court of Appeals.
This is a point where XRP supporters may feel frustrated as they are likely to face further setbacks. If that happens, the SEC’s only option may be to escalate the matter to the U.S. Supreme Court regarding disgorgement issues.
