No, The SEC Did Not Miss Its Deadline To Appeal Against Ripple Labs

Crypto Twitter is in a state of confusion regarding whether the U.S. Securities and Exchange Commission (SEC) has missed its deadline to appeal the court’s ruling in its complaint against Ripple Labs.

On Oct. 16, multiple crypto commentators and news outlets reported that the legal battle between Ripple Labs and the SEC had come to a close after the SEC failed to meet the deadline to submit its Form C filing as part of the appeals process surrounding the case.

The assertions were based on an SEC filing indicating that its Notice of Appeal had been filed on Oct. 2, from which it would have 14 days to submit Form C and Form D filings.

Eleanor Terrett, a reporter for Fox Business, said that several lawyers, including Ripple’s General Counsel, had told her that Oct. 16 was the deadline. “I find it really hard to believe the SEC would just let this important deadline sail by,” Terrett said.

“Very strange to leave a filing like this to the last minute and risk getting your appeal dismissed,” posted Jeremy Hogan, a partner at the Hogan & Hogan legal firm.

However, screenshots of an Oct. 4 docketing notice for the SEC’s notice of appeal stating that the regulator has until Oct. 18 to submit the requisite filings later began circulating on social media.

“According to this document filed in the Second Circuit, the SEC’s notice of appeal was filed the 2nd but not docketed until the 4th.” Terrett later posted on Thursday morning. “So, it seems the real deadline is actually Friday, October 18th at 11:59 PM.”

Landmark ruling

The drama surrounds last July’s landmark ruling from Judge Analisa Torres, the judge overseeing the SEC’s complaint alleging securities violations on the part of Ripple Labs.

Torres found that Ripple’s XRP token failed to satisfy the definition of a security according to the Howey Test — a legal framework used to determine whether an asset is a security. Torres ruled that digital tokens do not inherently comprise security assets, even when subject to primary distribution via a securities investment contract.

“XRP, as a digital token, is not in and of itself a ‘contract, transaction or scheme’ that embodies the Howey requirements of an investment contract,” Judge Torres wrote.

The court later went on to fine Ripple Labs $125 million for securities violations relating to its institutional sales of XRP.

Torres' ruling came as a blow to the SEC, which has repeatedly asserted that the vast majority of cryptocurrencies comprise unlicensed securities on the basis of their primary distribution taking the form of unregistered token sales.

On June 28, Judge Amy Berman Jackson of the District Court for the District of Columbia dismissed SEC charges against Binance alleging that secondary sales of its BNB and BUSD tokens comprised the distribution of unregistered security assets, citing Torres ruling in the Ripple case.

"The Court notes that several of the district courts presented with SEC enforcement actions involving cryptocurrencies have taken pains to differentiate the alleged investment contracts from the tokens themselves," Judge Jackson continued. “The Court finds these observations to be clarifying and persuasive [and] will endorse and follow the approach taken by the thoughtful judges who boldly wrestled with crypto assets before this case was filed.”

One month later, the SEC amended its complaint against Binance.