The U.S. Securities and Exchange Commission (SEC) has taken a step in its ongoing legal battle with Ripple Labs.
In a recent filing, the SEC has requested the Southern District of New York to review its ruling on the lawsuit against Ripple Labs. The agency argues that the court’s prior decision presents “knotty legal problems.”
Back in July, Judge Analisa Torres issued a summary judgment in which she found that Ripple’s sales of XRP to institutional investors violated securities laws.
However, she ruled that sales on public exchanges to retail investors did not constitute securities violations.
Amidst this legal showdown, Ripple Labs made an interesting announcement. They revealed their plans to acquire Fortress Trust, a crypto infrastructure startup based in Nevada.
This strategic move would provide Ripple with a regulatory license in the state of Nevada. However, the specific terms of this acquisition remain undisclosed.
In their recent filing, the SEC emphasized the necessity for legal clarity. They argued that there are conflicting opinions within U.S. courts regarding whether similar offerings pass the Howey test.
The Howey test is a crucial legal assessment employed by the SEC to determine if a transaction qualifies as an investment contract, thus categorizing it as a financial security.
The SEC had previously filed a motion to certify an interlocutory appeal against Ripple Labs on August 18th. Ripple, in response, submitted an opposition to the SEC’s motion, asserting that the SEC’s claims for an appeal are not legally sufficient to justify one.
This legal dispute between the SEC and Ripple Labs dates back to December 2020 when the SEC initially sued Ripple Labs. The core allegation was that Ripple had offered XRP as an unregistered security, setting the stage for this protracted legal battle.