XRP News: Ripple vs SEC – An Inappropriate Interlocutory Appeal?

Key Insights:

• XRP’s value falls below $0.50, a first since Judge Torres’ July 13 ruling on Programmatic Sales.
• Ripple defense argues that interlocutory appeal is inappropriate as it requires the Second Circuit to review the Court’s application of law to evidence.
• If SEC appeal is permitted, defendants will cross-appeal the Court’s Order on Institutional Sales being securities sales.

The Friday Overview

XRP extended the losing streak to three sessions on Friday, falling by 2.58%. Following a 3.35% slide on Thursday, XRP ended the day at $0.4978. Notably, XRP ended the day at sub-$0.50 for the first time since the July 13 Judge Torres ruling on Programmatic Sales.

Ripple Files Opposition to SEC Motion for Interlocutory Appeal

On Friday, Ripple and defendants Brad Garlinghouse and Chris Larsen filed their opposition to the SEC motion for locutory appeal.

Defense attorney James Filan shared the opposition filings to the SEC motion. The Ripple opposition filing focused on the ‘controlling question of law’ and the ‘pure question of law.’ Within the arguments section of the filing, the Ripple defense team noted,

“Because the questions the SEC presents for interlocutory appeal would require the Second Circuit to review this Court’s application of the law to the evidence adduced in summary (the parties’) judgment motion(s), an interlocutory appeal (is) inappropriate.”

To meet the requirements for an interlocutory appeal, the SEC must request the Court to review the ruling without studying the record. The Ripple defense team pointed out that the Second Circuit would also have to study the record, making an interlocutory appeal inappropriate.

Interestingly, Ripple raised the Court ruling on institutional sales, saying,

“Further, if the SEC is permitted to appeal, Defendants will seek to cross-appeal the portion of the Court’s Order finding Defendants’ Institutional Sales were sales of securities.”

Unsurprisingly, Ripple addressed the SEC reference to the SEC v Terraform Labs case, noting,

“Terraform, by contrast, accepted the SEC’s allegations that Terraform and its founder promised all purchasers – those who bought directly from Terraform or from some other source – ‘rates of returns of 19-20% on the coin owners’ initial investment.”

In contrast, Ripple made no such promises to purchasers in Programmatic Sales.

As per the Court Order, the SEC must file its response to the opposition filings by September 8. Upon the SEC filing, Judge Torres will deliberate and rule on the SEC motion for interlocutory appeal.

The Saturday Session

We expect the crypto community to slice and dice the Ripple opposition filing and speculate on the likely ruling on the SEC motion for locutory appeal.

Ripple Chief Legal Officer shared his immediate views on the filing, saying,

“Ripple just filed its opposition to the SEC’s request for an interlocutory (interim) appeal. Worth a read IMO, especially the footnotes. Fn. 5 is one of my personal favorites.”

Footnote 5 read as follows:

“The SEC states (at 16) it does not seek appellate review of any holding relating to the fact that the underlying assets here are nothing but computer code with no inherent value. The Court made no such ruling. To the contrary, undisputed evidence established XRP’s inherent utility as a bridge currency to facilitate cross-border transactions… Instead, the Court found that an XRP token is not, in itself, an investment contract because it does not, in itself, meet Howey’s requirements.”

In the SEC motion for interlocutory appeal, the SEC acknowledged that the ‘underlying assets here are nothing but computer code with no inherent value.’

Beyond the SEC v Ripple case, SEC v Coinbase (COIN) case-related updates will also need consideration. Ultimately, the outcome of the two cases will likely define the US crypto landscape. Significantly, the Court ruling on the Amicus Curiae filings to dismiss the SEC charges against Coinbase could prove pivotal. This week, presiding Judge Failla dismissed a case against Uniswap.

XRP Price Action

Daily Chart

After falling through the 200-day EMA and breaking under the trend line, XRP extended losses for a third session. A second denied recovery through the trend line enforced the downward bias signal.

The ongoing uncertainty toward the outcome of the SEC motion for interlocutory appeal will test buyer appetite. Failure to break through the $0.5042 resistance level and the trend line will bring sub-$0.48 into view.

Considering the 31.66 14-4H RSI reading, XRP has room to drop before entering oversold territory. However, an optimistic assessment of the Ripple opposition filing would support an XRP breakthrough the trend line to target the 200-day EMA.

4-Hourly Chart

XRP remains below the 50-day EMA and the trend line. This morning, XRP also hovered below the psychological resistance level of $0.50 and the $0.5042 resistance band. Failure to move through the resistance band to retest the trend line would leave XRP with a bearish bias.

Considering the 14-4H RSI 32.81 reading, XRP has room to fall before entering oversold territory. Market conjecture of the Ripple opposition filing and the likely ruling on the SEC motion for interlocutory appeal will influence. An optimistic appraisal would support a breakout from the $0.5042 resistance band to retest the trend line.