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The U.S. Securities and Exchange Commission (SEC) has come under scrutiny for missing a key deadline in its appeal against Ripple Labs. The agency’s late filing has raised questions about its internal operations and approach to regulatory enforcement. Hence, here are a few reasons that could be behind the delay in filing the Form C in the XRP lawsuit.
Reasons Why SEC May Have Missed Ripple Appeal Deadline
John Deaton’s law firm, through its legal news platform CryptoLaw, commented on X (formerly Twitter), calling out the SEC’s misstep. They pointed to a pattern of behavior under SEC Chair Gary Gensler’s leadership. They accused the agency of consistently failing to adhere to legal protocols under Gensler’s leadership.
“The SEC under Gary Gensler has run afoul of rules and failed to show faithful allegiance to the law before,” said CryptoLaw in its post. The firm also noted that this wasn’t the first time the SEC had been criticized for its handling of high-profile cases, questioning the reason behind the missed deadline.
One of the major focal points in the ongoing case is whether XRP, Ripple’s native crypto, qualifies as a security. In a pivotal ruling in July 2023, Judge Analisa Torres concluded that XRP itself was not a security, CryptoLaw highlighted.
Once again @MoonLamboio is quite right about how ridiculous this late filing is, but remember that the @SECGov under @GaryGensler has run afoul of rules and failed to show faithful allegiance to the law before. But…WHY did they miss this deadline?
A 🧵👇(1/6) https://t.co/enz7O4DqmD— CryptoLaw (@CryptoLawUS) October 17, 2024
The SEC, however, did not indicate any intention to appeal this specific ruling, leading some to believe the agency is facing internal challenges. The SEC also faced embarrassment when they expressed “regret” over the use of the term “crypto asset securities” in other communications. Thus, the legal news outlet believes that the Form C filing was delayed.
They also noted that Magistrate Judge Sarah Netburn, who has been involved in the case, previously criticized the SEC for its inconsistent arguments and lack of transparency. She also accused the agency of “hypocrisy” and failing to show “faithful allegiance to the law.”
This criticism was directed at the SEC’s attempts to withhold internal documents related to former SEC official William Hinman, which were considered relevant to Ripple’s defense. Adding to the internal strain, SEC Enforcement Director Gurbir Grewal resigned around the same time the notice of appeal in the Ripple case was filed, fueling speculation about internal disarray at the regulatory body.
CryptoLaw highlighted the significance of this timing in its social media commentary, stating, “About an hour before the SEC filed its notice of appeal…Gurbir Grewal resigned as part of a recent wave of resignations at the agency.”
Brad Garlinghouse’s Reaction
This comes after a spokesperson for the SEC downplayed concerns of a delayed filing. The source told OX’s Eleanor Terrett that the appeal “is proceeding normally, and the documents will be filed publicly soon.” Despite these reassurances, the SEC’s credibility continues to be challenged as the case progresses.
Meanwhile, Ripple CEO Brad Garlinghouse voiced his frustration at the SEC’s handling of the appeal. In a post on X, Garlinghouse criticized the agency’s procedural delays. He said, “Proceeding normally for an agency that makes up their own rules as they go!”