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This summer, Meredith has been covering the decision in SEC v. Ripple Labs, (SDNY 7/23), which attracted quite a lot of attention in the crypto community given the outcome of the case with respect to programmatic sales of tokens. As Meredith more recently noted, the plot recently thickened with the outcome in the SEC v. Terraform Labs, (SDNY 8/23) case. Late last week, the Ripple Labs case took yet another interesting turn as U.S. District Judge Analisa Torres said that she would allow the SEC to move forward with a request for an interlocutory appeal of the July decision, setting up the potential for a review of the decision by the Court of Appeals for the Second Circuit. A WSJ article regarding the potential appeal notes:

Interlocutory appeals allow for part of a case to be reviewed before a court renders its final judgment and are relatively rare. If Judge Torres grants the SEC permission to seek review by the U.S. Court of Appeals for the Second Circuit, it could be a year or more before a final decision is rendered. Both Ripple and its co-defendants, Chief Executive Brad Garlinghouse and co-founder Christian Larsen, opposed the SEC’s request.

In its letter to Judge Torres, the SEC noted that another judge in the Second Circuit—Jed Rakoff, ruling in a separate case earlier this month—questioned the idea that one asset could be either a security or a non-security depending on the purchaser.

The prospect for an interlocutory appeal is perhaps good news in terms of bringing some clarity to a situation where too much attention was paid to the outcome. However, the amount of time needed for an appeal to be considered and decided in the Second Circuit is no doubt far too long in the crypto community, which continues to clamor for “clarity” on the application of the Howey test to digital assets.

– Dave Lynn