A U.S. appeals court has upheld a California federal judge’s decision to dismiss a lawsuit filed by crypto-focused law firm Hodl Law. The firm had sought to compel the U.S. Securities and Exchange Commission (SEC) to clarify whether Ether (ETH) is classified as a security.
The Ninth Circuit Court of Appeals ruled on August 22 that Hodl Law’s complaint, filed in November 2022 in San Diego, failed to demonstrate a “realistic danger” of facing SEC enforcement actions simply for using Ethereum and Ether. The court noted that Hodl Law didn’t provide evidence that the SEC had investigated or threatened to investigate the firm’s use of Ether.
Hodl Law hoped the lawsuit would prompt the SEC to clarify its stance on ETH’s classification, especially following the regulator’s recent enforcement actions against various crypto firms. The firm argued that if the SEC deemed Ether transactions as violating securities laws, Hodl Law would already be in breach due to its legal practice involving Ether.
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The appeals court supported the California court’s July 2023 decision to dismiss the case, finding that Hodl Law had not shown that the SEC had engaged in “final agency action” regarding ETH. The panel also noted that there is no requirement for the SEC to issue specific rulemaking or respond to private requests for guidance on ETH’s status.
Fred Rispoli, senior managing partner at Hodl Law, expressed disappointment in the court’s ruling but remained resolute. He stated, “All we wanted was for the court to give us a chance to argue [ETH] isn’t a federal security.” Despite the ruling, Rispoli vowed to continue seeking answers from the SEC and explore other avenues for challenging the decision.
Cre: cointelegraph.
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