A recent development in Ripple’s case with the U.S. Securities and Exchange Commission has brought a somewhat abrupt end to the euphoria in the XRP community. Towards the end of last week, the agency was granted permission to pursue an interlocutory appeal. Ripple’s CTO responded to the development by questioning the agency’s approach in the lawsuit and also highlighted the intricate nature of the legal battle.
Meanwhile, XRP’s price had risen despite the bearish news and printed higher lows over the past couple of days. Subsequently, the remittance token may flip a significant resistance level into support before the end of this week.
SEC Prepares for Round 2 in the Ripple Case
The legal saga between the U.S. Securities and Exchange Commission (SEC) and Ripple continues to unfold, as recent developments have granted the SEC permission to pursue an interlocutory appeal. The culmination of this appeal could reshape the landscape of digital asset regulation and has drawn attention from both legal experts and the cryptocurrency community.
SEC Granted Permission for Interlocutory Appeal
On 17 August 2023, the U.S. Securities and Exchange Commission (SEC) received court approval to proceed with an interlocutory appeal against Ripple. The decision was made by Judge Analisa Torres, who reviewed submissions from both the SEC and Ripple before granting the SEC's request to file the appeal. This approval does not reveal the judge's stance on the appeal itself, but it signifies a significant step forward in the ongoing legal battle.
The Timeline of Appeal
The SEC was required to file its motion for appeal by 18 August 2023, while Ripple must submit its opposition papers by 1 September 2023. The SEC will then have the opportunity to file any reply by 8 September 2023. This timeline sets the stage for a thorough legal discourse that could shape the future of digital asset regulation in the United States.
Ripple's Previous Victory and the SEC's Response
The roots of this legal dispute trace back to December of 2020 when the SEC first brought charges against Ripple. Ripple, however, secured a partial victory in July of this year when the courts ruled that specific distributions of its digital asset, XRP, did not qualify as securities. Nevertheless, the SEC has chosen to challenge this verdict and seek an interlocutory appeal.
The SEC's Argument for Appeal
The SEC's decision to pursue an interlocutory appeal stems from the belief that there is a fundamental difference in interpretation of the law. The regulatory body argues that there are substantial differences of opinion, particularly in relation to a separate case involving Terraform Labs. These differences in perspective have created an "intra-district split" that the SEC aims to address through this appeal.
Ripple, in response to the SEC's appeal, raised concerns about the shift in focus from the original matter of applying the Howey test. The Howey test is a legal standard used to determine whether certain transactions qualify as investment contracts and consequently, securities. Ripple maintains that the appeal should not merely be based on differences in interpretation but should also entail a clear application of the law, which they believe is lacking in this scenario.
Impact on Ripple Executives and Trial
The legal wrangling between Ripple and the SEC has implications for the company's executives, Brad Garlinghouse and Chris Larsen. Lawyers representing these executives have expressed concerns over the potential delay or pause in proceedings resulting from the SEC's appeal. This could prolong the trial and create uncertainty for the individuals who are awaiting a jury trial at their own request.
Ripple CTO Highlights Case Complexity
Meanwhile, in a recent update on X (formerly Twitter), Ripple Labs' Chief Technology Officer, David Schwartz, shed light on the latest development in Ripple’s lawsuit with the SEC. The strategic appeal by the SEC has sparked discussions about the procedural intricacies of the case and its potential impact on the efficiency of the legal proceedings.
SEC's Appeal Strategy: A Point of Interpretation
David Schwartz's update centered around the SEC's decision to seek an appeal at a specific juncture in the legal proceedings. The SEC's stance is rooted in its interpretation that the case has not yet reached its conclusion. This interpretation affords parties involved in the legal battle the opportunity to appeal after the primary case has been finalized. By employing this procedural tactic, the SEC aims to streamline the legal process and prevent undue disruptions arising from multiple appeals concerning minor decisions.
Triggered by Unforeseen Developments
The catalyst for the SEC's appeal was the verdict delivered by Judge Analisa Torres on 13 July this year, where XRP, Ripple's native digital asset, was deemed not to be a security when sold on digital asset exchanges. Despite this favorable outcome for Ripple, the SEC's subsequent appeal focuses on an unexpected turn of events within the ongoing legal proceedings.
Consolidating Appeals for Efficiency
Schwartz emphasized the importance of consolidating appeals to streamline the legal process. He highlighted that having separate appeals could further elongate the already complex proceedings. However, Schwartz did acknowledge a rule that makes provision for special circumstances. The SEC contends that the unique nature of this case warrants a departure from conventional procedures. The regulatory body suggests a temporary halt to the proceedings until the appeal is resolved, but Ripple holds a differing perspective.
Ripple's Stance and Balance of Priorities
Ripple's position on the matter is that, even though the SEC has the right to appeal, the core lawsuit should proceed while the appeal process unfolds. This stance aligns with the idea of allowing the trial to continue and thoroughly evaluating appeals once the primary case has concluded.
Addressing Rumors and Implications
Schwartz's update also addressed rumors circulating within the cryptocurrency community that the SEC might intend to escalate the matter to higher courts. This speculation underscores the significance of the outcome of the legal dispute between Ripple Labs and the SEC. The final decision regarding the acceptance of the appeal request holds the potential to significantly impact the trajectory of this complex legal battle.
XRP Price Performance
At press time, the remittance token was trading hands at $0.5287 according to CoinMarketCap. This was after XRP achieved a 24-hour gain of 1.74% over the past 24 hours. Nevertheless, the weekly performance for the altcoin remained in the red zone, and was down more than 16% for the week.
Along with the increase in price during the past day, XRP also recorded a 51.43% uptick in its 24-hour trading volume. Subsequently, the collective volume for XRP across all exchange platforms was estimated to be $1,554,570,514 at press time.
Levels to Watch This Week
Daily chart for XRP/USDT (Source: TradingView)
From a technical standpoint, XRP’s price had broken above the lower level of the Bollinger Bands (BBANDS) indicator on its daily chart over the past 48 hours. As a result, the cryptocurrency’s price was attempting to challenge the $0.5380 resistance level at press time. If it succeeds in flipping this level into support within the next 48 hours, then it may look to do the same with the next major threshold at $0.5890. The only major obstacle standing in the way of XRP’s price reaching this mark will be the 9-day Exponential Moving Average (EMA) at around $0.5560.
XRP’s price closing a daily candle above $0.5890 during the coming week will be a noteworthy achievement for the altcoin’s price, as it will also result in XRP reclaiming the support of the 20-day EMA line. This will then clear a path for the remittance token’s price to climb to the upper level of the BBANDS indicator at $0.7099.
However, this bullish thesis will be invalidated if XRP fails to close a daily candle above $0.5380 within the next 48 hours. This rejection could lead to the altcoin’s price retesting the crucial support level at $0.4715 in the following few days. Continued sell pressure may also briefly force XRP’s price to $0.4090 before closing the daily candle back above $0.4715 - similar to what happened last week Thursday.