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On July 13, 2023, Judge Analisa Torres delivered a summary judgment decision in SEC v. Ripple, ruling that XRP is not a security in and of itself; Ripple's sales of XRP through secondary trading platforms did not constitute securities transactions, although its direct sales to institutional investors did.

Following the summary judgment decision in the Ripple case, on Aug. 18, the SEC filed an interlocutory appeal challenging the court's ruling on Ripple's programmatic XRP sales on secondary trading platforms.

On Oct. 3, 2023, Judge Torres denied the SEC's motion, stating that its holding did not pose a controlling question of law for which there was a substantial ground for a difference of opinion.

Following Judge Torres' dismissal of the interlocutory appeal, the SEC voluntarily withdrew its claims against the individual defendants, Ripple executives Brad Garlinghouse and Chris Larsen.

According to legal observers, the voluntary dismissal at the time indicated the SEC's strategy to avoid a lengthy trial to be able to challenge aspects of Judge Torres' summary judgment decision on appeal.

Will SEC appeal XRP's security status?

Fast forward to this year, when in an August ruling, Ripple was hit with a $125 million civil penalty and a general injunction, thereby ending the nearly four-year legal SEC case.

However, speculations about an appeal began after Ripple sought in a Sept. 4 filing that 111% of the monetary judgment be placed in a bank account to secure a stay.

Amid this speculation, SEC veteran Marc Fagel has provided insights into this complex legal situation, highlighting the potential paths forward for the SEC and what an appeal might involve.

According to Fagel, if the SEC chooses to appeal, it will be over whether the programmatic sales constituted securities sales. He believes the court of appeals could answer that question without deciding whether XRP is a security. Fagel added that this remains a peripheral issue, which is why it was just dicta, in the district court's opinion.

The former SEC regional director was answering a question by an X user, who asked if the SEC could challenge the dicta on XRP's security status directly.

Fagel highlighted the possibility of the SEC trying to get the court of appeals to address this part of the opinion as it had been intentionally vague about it in many of their cases. Fagel in his own opinion feels this is not essential and the second circuit is unlikely to take on the question.