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Attorney Jeremy Hogan provides a critical analysis of the SEC’s decision to appeal the Ripple ruling.
As earlier reported, the SEC has revealed its intentions to appeal Judge Torres’ verdict in the Ripple case. Although the agency has not officially filed the appeal brief, there are speculations that the upcoming appeal would revolve around Judge Torres’ decision on Ripple’s programmatic sales and other distributions of XRP, which were deemed non-investment contracts.
This speculation emanates from the fact that the regulator had attempted to overturn these decisions through an interlocutory appeal. While the judge denied this interlocutory appeal request at the time, there are indications that the SEC would resume its quest to overturn the decision in the Second Circuit.
SEC Poor Risk Calculation
In a recent analysis, Attorney Hogan characterized the SEC’s appeal decision as a “big mistake.” He said the securities regulator would likely appeal Judge Torres’ programmatic sales ruling. The lawyer mentioned that the SEC did not calculate the risk of appealing the Ripple ruling.
He noted that the SEC could get Ripple to pay more fines if it wins the appeal. Conversely, the regulator risks destroying its ability to regulate cryptos should Ripple raise the “Blue Sky” argument and win.
Consequently, the pro-XRP lawyer referred to the SEC’s appeal decision as a poor risk calculation, emphasizing that the regulator would make a poor stock trader.
Right to Appeal
The lawyer stated that the SEC’s latest appeal notice differs from the previous attempt denied by Judge Torres. Hogan said this appeal is the SEC’s right. As a result, the trial judge cannot deny the request.
High Likelihood of Losing
In addition, Attorney Hogan stated that the SEC would likely lose the appeal, citing Judge Torres’ decision’s fact-heavy nature. It is noteworthy that Judge Torres issued the Ripple decision by applying the Howey Test to the case.
For instance, the programmatic sales decision was based on the third factor of the test, which revolves around the expectation of profit derived from the efforts of others.
The judge, who cited affidavits from over 3,000 XRP holders, noted that retail buyers of XRP did not expect to make profits by relying on Ripple’s efforts.
It’s a Matter of Money
Furthermore, the legal expert noted that even though the SEC wins the appeal, the impact would likely be limited to Ripple paying more money in fines.
He contended that a favorable decision for the SEC would not change how Ripple uses XRP, adding that the regulator cannot appeal the non-security status of the token.
Potential Timeline of Appeal Ruling
Attorney Hogan predicted that the Second Circuit will not issue a final decision until late 2025 or early 2026. Although he previously speculated that the appeal ruling could be issued in Summer 2025, he admitted he was wrong.
The lawyer argued that the SEC could file its actual appeal brief by mid-December, potentially revealing the issues it wishes to appeal.
Resignation of SEC Enforcement Director
The legal expert indicated that there might be a deeper connection between the resignation of SEC’s enforcement director, Gubir Grewal, and the commission’s appeal decision. Notably, the SEC filed its appeal notice in the Ripple case hours after Grewal announced plans to leave the commission.
A similar pattern occurred during the initial filing of the Ripple lawsuit. At the time, Bill Hinman, the former SEC director who declared Ethereum (ETH) as a non-security, left the SEC less than two months before the commission charged Ripple with violating federal securities laws. Additionally, the SEC sued Ripple on the last day of former chairman Jay Clayton’s tenure.
This coincidence has raised eyebrows among crypto proponents, with some, like Hogan, suggesting that there could be some deep connection between these events.
What Could Bring an Early End to SEC Appeal
While Hogan expects the appeal to be concluded by late 2025 or early 2026, he hinted that there is a likelihood the case could be finalized sooner. The lawyer highlighted factors like change in SEC leadership, with Donald Trump as president, could result in early resolution of the appeal.
Several crypto proponents, including Ripple CLO Stuart Alderoty, have backed Trump, as they believe he would introduce favorable regulations for the industry. In the meantime, Ripple is considering whether to file a cross-appeal.