Crypto market turns red again, as SEC appeals against Ripple

The cryptocurrency market has once again slipped into the red zone, with a notable trigger being the revelation of the U.S. Securities and Exchange Commission’s (SEC) intent to take legal action against Ripple.

Amidst these developments, Bitcoin’s value surged momentarily, challenging the crucial support level of $30,000.

However, the bullish momentum was short-lived as selling pressure prevailed, pulling the price back below this pivotal mark.

The downturn coincides with the approaching release of the Consumer Price Index (CPI) report for July. Forecasts indicate a year-over-year increase in headline inflation to 3.3%. Furthermore, there are talks of a reduction in the prime rate from 4.8% to 4.7%.

In a significant development, the SEC, on Wednesday, filed a court document detailing its intention to pursue an “interlocutory appeal” against the judge’s decision concerning Ripple’s XRP sales program.

This strategic move by the regulatory body seeks to focus on specific portions of the ruling, aiming to prevent the necessity of multiple trials involving the SEC and the government.

The SEC’s appeal is centred around obtaining certification for the court’s stance that the sales of XRP to buyers over cryptocurrency trading platforms, termed “Programmatic offers and sales,” and Ripple’s exchange of XRP for labour and services (“Other Distributions”), did not qualify as securities offerings under the criteria set by the Howey test.

“Specifically, the SEC seeks to certify the Court’s holding that Defendants’ ‘Programmatic’ offers and sales to XRP buyers over crypto asset trading platforms and Ripple’s ‘Other Distributions’ in exchange for labour and services did not involve the offer or sale of securities under [the Howey test],” according to the SEC filing.

This marks the latest twist in the ongoing legal clash between Ripple and the SEC, a conflict that ignited when the agency initiated legal action against the company in 2020.

The SEC’s allegations revolve around the unregistered sale of XRP, which the agency contends to be a security, resulting in the raising of $1.3 billion.

Notably, hints have emerged that the SEC is not entirely satisfied with Judge Analisa Torres’ earlier decision. Chairman Gary Gensler expressed his disappointment with certain aspects of the prior ruling, deeming it erroneous, drawing parallels to a separate lawsuit against Terraform Labs and Terra’s CEO Kwon.

Judge Analisa Torres has provisionally scheduled a trial for other aspects of the case, unaddressed during previous motions for judgment, in the second quarter of 2024.

According to the filed documents, Ripple must respond by August 16, 2023, while the suggestion is for an initial summary of the appeal to be submitted by August 18. Ripple will then have a two-week window to reply, followed by an additional week for the SEC’s response, subject to the judge’s approval.

This move by the SEC isn’t isolated, as indications have already been given in a separate case.

The regulator’s legal representatives urged Judge Jed Rakoff, operating within the same court, to disregard the ruling as he deliberated Terraform Labs’ motion to dismiss their lawsuit with the SEC. Rakoff eventually declined the dismissal motion and indirectly questioned Torres’ decision regarding programmatic sales.