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Options for Ripple Labs in Response to SEC’s Request for Interlocutory Appeal

Regulation | Aug 15, 2023

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Image: Unsplash/Katarina Miloševic

The SEC seeks to challenge a recent court decision that favored Ripple Labs, reigniting discussions on how Ripple's XRP token should be classified and highlighting the complexities of digital asset regulation.


  • The central issue of the dispute revolves around the classification of Ripple's XRP token. Judge Analisa Torres had previously ruled in favor of Ripple, stating that the sale of the XRP token on public exchanges complied with federal securities laws.
  • However, in a bid to establish a clear regulatory framework for cryptocurrencies, the SEC has decided to appeal this ruling.
  • This decision was perceived as a potential game-changer for the digital asset industry. The SEC's appeal will undergo a rigorous judicial review. The outcome will not only determine the fate of Ripple's XRP but will also set the tone for the regulatory treatment of digital assets in the U.S. and potentially beyond.

Options for Ripple Labs in Response to SEC's Request to Appeal

James Murphy, a well-known lawyer and crypto enthusiast, has provided an in-depth analysis of the SEC's request for an interlocutory appeal against Ripple in the XRP lawsuit. Here's a summary of his insights and Ripple's potential responses:

  • Option 1:  the Motion to Certify the Appeal: Ripple might choose to oppose the SEC's appeal request. Murphy suggests that Ripple could present various reasons for this, including alternative strategies if they accept the appeal.  Reasons that this might be the green lit next step:
    • Their belief that Judge Torres' ruling, based on the Howey test, is fair and aligns with past decisions.
    • The possibility of Congress introducing a new crypto law.
    • Anticipation of a change in the 2025 administration's crypto stance.
    • Murphy's view that the appeal has a low likelihood of success, influenced by Judge Rakoff's remarks.

See:  Consultation Until Sep 20, 2023: OSFI Proposes New Guidelines for Crypto-Asset Exposures in Canada

  • Option 2:  Agree with the SEC: Another option for Ripple is to concur with the SEC that an interlocutory appeal is appropriate. While Murphy believes Ripple might not lean towards this option, he wouldn't be surprised if they did. The main question here is the timing of the appeal process – whether it would begin immediately, after a year or more, or post the trial of Brad Garlinghouse and Christian Larsen.
  • Option 3:  Clause to the Second Option: If Ripple agrees to an interlocutory appeal, they might push for the court to certify the SEC's win on institutional sales for cross-appeal. This would mean no need for a penalty phase or further trial if the 2nd Circuit reverses the SEC's win on institutional XRP sales.

Critical Moment in Digital Asset Regulation

The SEC's appeal against the Ripple Labs ruling is not just a legal skirmish; it's a defining moment in the evolution of digital asset regulation. The outcome will have significant implications on innovation, investment, and the future trajectory of the crypto industry.

NCFA Jan 2018 resize - Options for Ripple Labs in Response to SEC's Request for Interlocutory AppealThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit:

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