The U.S. Securities and Exchange Commission has taken the next step in appealing Judge Analisa Torres’ previous ruling in its long-running legal dispute with Ripple.
Late Thursday, the formidable regulator filed a pre-argument civil statement of appeal — also known as Form C — challenging some aspects of Torres’ summary judgment in favor of Ripple. However, the legal status of the controversial cryptocurrency XRP will not be targeted as part of the regulator’s appeal.
Ripple Executives Targeted in SEC Appeal
Many XRP fans were concerned that the Securities and Exchange Commission might challenge XRP’s securities status in the Form C. Much to their delight, this did not happen, giving XRP a significant advantage as the appeals process unfolds.
Judge Analisa Torres’ landmark July 2023 ruling partially favored Ripple, finding that the fintech company’s sales of XRP to retail investors on exchanges did not violate federal securities laws. The court concluded that the transactions did not meet the legal criteria for investment contracts, dealing a blow to the SEC’s broader efforts to regulate cryptocurrency sales under existing securities laws.
The SEC’s filing to the U.S. Court of Appeals for the Second Circuit late Thursday does not challenge the ruling that sales of XRP to retail investors through exchanges are not securities. Instead, the commission is focusing on other key aspects of the ruling.
The appeal targets the court's ruling that Ripple's offers and sales of XRP on digital asset trading platforms, as well as personal sales by Ripple CEO Bradley Garlinghouse and Executive Chairman Chris Larsen, did not constitute securities violations.
“Whether the district court erred in granting partial summary judgment in favor of defendants with respect to Ripple’s offers and sales of XRP on digital asset trading platforms (and Garlinghouse and Larsen’s aiding and abetting of those offers and sales), Garlinghouse and Larsen’s personal offers and sales of XRP, and Ripple’s distribution of XRP in exchange for consideration other than cash,” the Form C reads.
“These issues will be considered afresh,” the SEC said in its appeal, meaning the appeals court will review the legal issues presented afresh without regard to the district court’s interpretations.
SEC Does Not Dispute XRP’s Non-Security Status
Ripple’s chief legal officer Stuart Alderoty commented on the SEC’s appeal in a post on X, emphasizing that the agency is not appealing the ruling that XRP is not a security. “That decision remains the law of the land,” Alderoty said, adding that Ripple is preparing to file its own Form C next week with no specific date set.
No surprises here — once again, this has been made clear. The Court's ruling that "XRP is not a security" is NOT subject to appeal. That decision remains the law of the land. Keep an eye out for Ripple's Form C filing next week. https://t.co/m9molUGSBv
— Stuart Alderoty (@s_alderoty) October 18, 2024
Last August, Judge Torres issued a final order barring Ripple from further violating Section 5 of the Securities Act of 1933 and ordering the company to pay a $125 million fine.
The appeals process is expected to involve a three-judge panel, with a final ruling likely to take at least a year. For now, the focus remains on the SEC’s argument that the court’s ruling on XRP sales could set a troubling legal precedent for future lawsuits.
At press time, XRP's price was stable at $0.549, down 1.28% on the day. However, the coin is still up 1.9% over the past seven days.#MarketDownturn #IntroToCopytrading #xrp
