Ripple’s long-standing issues with the U.S. Securities and Exchange Commission (SEC) have now reached a tipping point, especially when it comes to appeals. Speaking on the XRP-SEC lawsuit, Stuart Alderoty, Ripple’s Chief Legal Officer, weighed in, offering some insight into the potential form the decision could take. Alderoty shared a post on “X” outlining two scenarios for an SEC appeal, reiterating that Ripple feels secure in its Fair Notice defense and saying there are strong indications that it has reasons why it believes XRP is not a security.
Two Possible Outcomes of the XRP-SEC Appeal
According to sources, Alderoty said the U.S. Court of Appeals for the 2nd Circuit essentially has two options: It can uphold Judge Analisa Torres' July ruling or extend the ruling. He stated:
“The 2nd Circuit Court of Appeals will either confirm Judge Torres or extend her ruling. The best the SEC can hope for (and it is a distant hope) is an order of remand.”
A remand would return the case to the District Court for further consideration, but Alderoty said that was unlikely. He also noted that the SEC’s appeal was previously dismissed in a hearing, when the agency attempted to challenge a ruling related to passive retail sales of XRP.
Ripple's Fair Notice Defense Remains Strong
At the heart of the XRP-SEC lawsuit is the Fair Notice defense, arguing that the SEC has failed to provide clear guidance on whether XRP is a security. Alderoty emphasized on this note that the defense remains intact and that if the case does indeed go back to the lower court, all of Ripple’s defenses, including Fair Notice, will be reconsidered.
“The SEC will probably argue to Judge Torres that she is not of ‘common intelligence’ when she rules against them. It’s awkward,” Alderoty joked, referring to the Fair Notice standard.
This argument is based on the notion that enforcement information available to anyone with “common sense” is inherently opaque and that such claims brought against Ripple by regulators like the SEC are unfair. The stakes are not insignificant, but Aldeoty’s belief in this defense shows that Ripple is willing to continually challenge the SEC.
Ripple's Confidence in XRP's Non-Security Status
Ripple, despite the request, has continued to maintain that it is not a security. In a July ruling, Judge Torres ruled that XRP sales to retailers do not constitute securities transactions—a major victory for Ripple. While the SEC is moving to overturn other parts of the case, Ripple recently filed a cross-appeal to counter that argument.
Alderoty further noted that despite the ongoing legal battle, XRP’s non-security status in retail sales remains in effect. So, at least for now, XRP appears to be “clear” from the SEC staff’s claims regarding retail transactions.
The XRP-SEC lawsuit has become a major event in the ever-changing cryptocurrency compliance landscape. The decision on appeal will have implications for not just XRP, but for cryptocurrencies in general. If Ripple wins the case, it could set a valuable precedent that certain cryptocurrencies should only be considered securities until a certain point in time.
The fact that Stuart Alderoty is inclined to agree suggests that Ripple is sticking to its legal strategy and believes that the SEC doesn’t have as strong a case as they would like people to believe. Armed with XRP’s non-security status and now Ripple’s own solid defense; the company will fight the SEC — all eyes from the broader crypto industry are on them.
This legal saga is quickly turning into a morality play, Alderoty said. It’s unclear whether the SEC will prevail, but Ripple appears prepared for such a scenario.
Conclusion: Ripple's Next Chapter
As for Ripple’s lawsuit against the SEC, everyone is watching the outcome of the appeals effort. That said, with two different outcomes on the horizon, the company is ready for whatever fight it faces with the SEC. With the fight for a clear path still ongoing, Ripple’s stance and confidence that XRP is not an unregistered security shows that neither side is going down without a fight. The outcome of this litigation battle will undoubtedly help determine the regulatory stance of the United States toward digital assets for years to come.
