SEC's 'cryptos are securities' court appeal denied

SEC's 'cryptos are securities' court appeal denied
Regulator cannot challenge federal court judge’s ruling on Ripple Labs’ digital currency.
OCT 04, 2023
By  Bloomberg

The federal judge who ruled that Ripple Labs Inc.’s cryptocurrency doesn’t constitute a security when sold to the general public denied the Securities and Exchange Commission’s request to appeal the determination before trial.

U.S. District Judge Analisa Torres on Tuesday ruled against the regulator in a case it filed against Ripple in Manhattan federal court. A trial is scheduled for April.

The SEC needed Torres’s permission to appeal her ruling because it wasn’t a final judgment. The regulator was also seeking to put on hold its suit against Ripple for allegedly offering unregistered securities while the appeal is pending.

Ripple’s XRP token climbed as much as 6.3% after the decision to deny the SEC’s request to appeal, before paring some of the gain to trade near 54 cents as of 7:20 p.m. in New York on Tuesday. The token has rallied 58% this year, compared with a 33% advance in a gauge of the top 100 digital assets.

Torres’s ruling was widely hailed as a victory for the crypto industry, which has resisted attempts to categorize digital assets as securities subject to regulation. In her July 13 decision, Torres drew a distinction between sales of XRP to institutional investors, which she said met the test for an investment contract under federal securities law, and sales to the public on exchanges.

Ripple had opposed the SEC’s request. The company said last month that the agency was “rushing to appeal” what it claims is a legal question that applies to every case involving digital assets while “the factual and legal procedural postures of other SEC enforcement actions are different.”

The SEC had noted that another Manhattan federal judge, Jed Rakoff, explicitly rejected Torres’s approach in the SEC’s case against Terraform Labs and its founder Do Kwon, finding that the Terra USD token may indeed be a security when sold to retail investors.

The case is SEC v. Ripple Labs Inc., 20-cv-10832, US District Court, Southern District of New York (Manhattan).

Latest News

The 2025 InvestmentNews Awards Excellence Awardees revealed
The 2025 InvestmentNews Awards Excellence Awardees revealed

From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.

Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty
Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty

Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.

Edward Jones joins the crowd to sell more alternative investments
Edward Jones joins the crowd to sell more alternative investments

“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.

Record RIA M&A activity marks strong start to 2025
Record RIA M&A activity marks strong start to 2025

Sellers shift focus: It's not about succession anymore.

IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients
IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients

Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.

SPONSORED Compliance in real time: Technology's expanding role in RIA oversight

RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.

SPONSORED Advisory firms confront crossroads amid historic wealth transfer

As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.