Gensler declines to say if, or when, the SEC might appeal Ripple decision

Securities and Exchange Commission Chair Gary Gensler declined to say if his agency will appeal last week’s split decision in its enforcement case against Ripple Labs, or what the commission's timeline is for making a decision to appeal. 

But Gensler echoed the parts of the federal judge’s summary judgment that he agreed with while speaking to reporters following an appearance before the Senate Appropriations Committee. 

“Parts of that ruling with regards to institutional investors, the Howey analysis applies to those institutional sales,” he said, referring to the frequently cited legal precedent that helps define a security investment that requires certain disclosures in the U.S. “That we appreciate. Less so as it related to the Howey analysis on retail sales, but still taking a look at it.” 

Asked by The Block about the crypto industry’s interpretation of the ruling as a repudiation of the SEC’s approach to policing digital assets, Gensler responded, “I don’t have any comments on that.”

Gensler also declined to comment as to whether the Ripple ruling would cause the commission to pause litigation with other crypto firms until an appeal was sorted out. 

Waiting game

An appeal from the SEC could take time. Aside from the amount of time a legal analysis could take, staff has to present commissioners its recommendations, and the bipartisan commission votes on whether to proceed with litigation. The current commission has three Democrats and two Republicans, meaning if Gensler and staff want to appeal the portion of the ruling that went against the commission, they likely can convince a majority of the commission to do so. 

Ripple may also appeal since its executives could be found liable for playing a part in the illegal sale of securities. Judge Analisa Torres, of the U.S. District Court of the Southern District of New York, ruled that over $700 million worth of XRP sales to institutional investors broke securities laws, but that other XRP sales did not. 

An appeal of Torres's ruling from either side would go to the Second Circuit Court of Appeals.