The battle between the Securities and Exchange Commission (SEC) and Ripple Labs over the regulatory status of XRP took a dramatic turn last week. The latest powerplay? A Hail Mary interlocutory appeal from the authority. The agency tried appealing a past court decision allowing Ripple to use a “fair notice” defense. However, prominent lawyers vehemently oppose this, predicting its inevitable rejection.

Ripple’s chief counsel, James K. Filan, and Coinbase CLO Paul Grewal already called the SEC’s bluff. In their view, the rigid standards for an interlocutory appeal still need to be met. These mid-case appeals only proceed if waiting for a final verdict would cause “irreparable harm.” According to Filan, the agency has yet to prove this harm exists. 

The lawyer forecasted a quick rejection on Twitter: “There are strong legal reasons why the Court of Appeals should deny the SEC’s motion.” Grewal agreed the appeal has “no merit” and fails to meet the statutory requirements. 

If denied, the sparring match progresses to summary judgment. This involves the court reviewing evidence and arguments before allowing a trial. The background of this mess traces back to 2020. That’s when the agency dropped a bombshell lawsuit declaring Ripple’s XRP sales violated securities laws.

The SEC alleged that over $1.3 billion worth of XRP was sold without proper registration and disclosures. What’s more, the regulator argued that XRP is more like an investment than a currency. 

Ripple maintains the opposite – that XRP works as a currency, not a security. The company also claims the agency should have warned about XRP’s status fairly. Experts say the final judgment could shape future crypto rules. Will XRP and other coins like Bitcoin and Ethereum be securities or currencies?

Both sides continue devoting massive resources to the case. The appeal shows the agency wants to crush Ripple’s defense before trial.

But Filan and Grewal’s predictions cast doubt on the SEC’s prospects. The agency may soon have to confront Ripple’s arguments head-on. 

For crypto companies, the outcome could clarify XRP’s future. The same goes for broader questions around coin regulations.

Yet if the appeal gets rejected, some regulatory uncertainty remains. The US agency can still prove its case against Ripple’s defenses. So, the legal rollercoaster continues. But for now, the vocal critics raise questions about the authority’s strategy.

Ripple and Coinbase seem confident the appeal will flop. If they’re right, the SEC’s bluff has been called dramatically.

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