Yahoo Finance US judge denies SEC's attempt to appeal Ripple ruling
A US judge denied an attempt by the Securities and Exchange Commission to appeal a ruling that digital tokens are not securities when sold to the general public, another blow to the agency's efforts to rein in the industry.
Federal judge Analisa Torres in the Southern District of New York issued her decision Wednesday in a case involving Ripple Labs and its XRP token, saying there was no "substantial ground for difference of opinion" about her findings.
Torres was the judge who ruled in July that XRP was a security only when sold to institutional investors. The sale of XRP on public exchanges to retail customers, she said in July, did comply with federal securities laws.
Her initial ruling was hailed as a victory in the crypto world, and her decision on Wednesday to deny the SEC's appeal was also celebrated by some industry participants.
"This victory is another example of a court halting the SEC's efforts of regulation by enforcement" against crypto firms, said Daniel Stabile, a legal partner with the law firm Winston & Strawn, which represents both Ripple Labs and cryptocurrency exchange Binance in other legal matters.
XRP (XRP-USD), the fifth-largest crypto token, which was originally created and issued by Ripple Labs, rose 5% Tuesday.
Crypto stocks including those for Coinbase Global (COIN), Microstrategy (MSTR), and bitcoin mining firms, Marathon Digital (MARA) and Riot Platforms, Inc (RIOT) rose at Wednesday's open between 1%-3% but gave back those gains by 11 a.m. ET.
The SEC and its chair Gary Gensler have argued repeatedly that certain cryptocurrencies are securities and therefore should be overseen by the US agency, using that assertion as the basis for several lawsuits against major industry players.
It has brought a string of enforcement actions against crypto investors and businesses since the beginning of January. That includes cases against Coinbase and Binance, the world's biggest crypto exchange.
Another blow to the SEC's campaign came in August when a federal appeals court sided with an asset manager that hopes to launch the first bitcoin exchange-traded fund over the objections of the SEC.
A panel of judges found the SEC's reasoning for denying the request from Grayscale Investments was "arbitrary and capricious."
The agency has two weeks left to request a rehearing for that case.
The SEC has had some victories. Another federal judge, Jed Rakoff, said on July 31 that digital currencies can be considered securities when sold to the general public, contradicting the earlier ruling from Torres. His case involves Terraform Labs' Terra USD token.
Torres on Wednesday said her decision did not conflict with Rakoff's ruling. She has set a trial date in the Ripple Labs case for April 23 of next year.
The regulator can now either settle the case with Ripple before then or motion to appeal again after the trial.
David Hollerith is a senior reporter for Yahoo Finance covering banking and crypto.
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