SEC Challenges Key XRP Ruling Through New Appeal

In its ongoing legal battle with Ripple Labs, the U.S. Securities and Exchange Commission (SEC) has formally challenged a previous ruling. The agency appealed the ruling made by Judge Analisa Torres by submitting a Civil Appeal Pre-Argument Statement, or Form C as it is more commonly known.

The SEC first accused Ripple of raising $1.3 billion through unregistered XRP transactions in 2020, which sparked the legal spat. Judge Torres made a crucial ruling more than a year ago, holding that the XRP sales did not break any securities laws. She did conclude, nonetheless, that direct sales of XRP to institutional investors did meet the requirements for securities. After that, in August, Ripple was mandated to pay $125 million in fines.

The Context

The legal dispute over whether XRP sales on cryptocurrency exchanges could be regarded as securities has been rekindled by this latest action. In its initial lawsuit, the SEC accused Ripple and its representatives of selling and promoting XRP without the required registration, in violation of several provisions of the Securities Act of 1933.

The organization is currently looking for information regarding whether the Southern District of New York United States District Court made a mistake in the procedures concerning Chris Larsen, co-founder of Ripple, and CEO Brad Garlinghouse. Additionally, the SEC asked that the issues be reviewed de novo, which means that the court will reconsider a decision based on inquiries into the application of the law.

Alderoty Responds

Stuart Alderoty, the Chief Legal Officer of Ripple, commented on the SEC filing through X, stating that the company intends to file its Form C the following week. He declared that this should come as no surprise as it has already been explained, and that there will be no appeal of the decision made by the court regarding the security status of XRP. The ruling is still enforceable throughout the nation, he concluded.

On October 2nd, the SEC filed its initial appeal, claiming that the ruling made by the district court in the Ripple case runs counter to decades of previous documents and cases which have, in their words, always been referred to concerning securities legislation and Supreme Court precedent.

In response to the SEC, Ripple filed a cross-appeal to make sure all relevant factors were considered and taken into account, in line with what Alderoty had to say regarding the need for rights and obligations in order to clearly define what an investment contract actually is and entails.