The U.S. Securities and Exchange Commission (SEC) is preparing to submit its initial appeal brief in the Ripple case. This crucial document, due by January 15, will focus on secondary XRP sales, penalties, and other key issues in the case.

SEC Led by Gary Gensler Prepares for the Appeal

SEC Chair Gary Gensler is set to submit critical documents related to the Ripple case before stepping down on January 20. Legal experts, including Jeremy Hogan and former SEC attorney Marc Fagel, speculate that Ripple and the SEC could reach a settlement. Ripple might pay a $125 million penalty, potentially closing the case by April or May.

Dispute Over Programmatic XRP Sales

The SEC plans to challenge Judge Analisa Torres' July 13 decision regarding programmatic XRP sales. The agency argues that these sales constitute unregistered securities transactions in violation of the Securities Act of 1933. According to Marc Fagel, Ripple allegedly raised over $700 million unlawfully through these sales.

Secondary XRP Sales as a Key Dispute Point

The SEC will focus on secondary XRP sales, including Ripple's transactions on cryptocurrency exchanges, distributions to employees, and personal sales by Ripple executives like Brad Garlinghouse and Chris Larsen. Judge Torres' decision, however, did not clearly define whether XRP is a security or a commodity, which has significant implications for the crypto industry.

It's worth noting that XRP was previously classified as "currency" by the U.S. Department of Justice and the Treasury Department's FinCEN, adding complexity to the SEC's appeal.

Higher Penalty Than $125 Million?

The SEC is likely to push for a penalty higher than $125 million and seek a reassessment of disgorgement (return of illicitly gained funds). The agency argues that smaller penalties may fail to serve as an effective deterrent.

Meanwhile, Ripple has criticized the SEC for pursuing "failed arguments" and wasting taxpayer money. Ripple's Chief Legal Officer Stuart Alderoty has pointed out the SEC's inability to provide clear rules on which digital assets are considered securities.

What’s Next?

Ripple recently garnered positive attention following a dinner between its executives and President-elect Donald Trump, raising hopes for a more favorable regulatory environment for cryptocurrencies in the U.S. Ripple CEO Brad Garlinghouse noted that 75% of Ripple’s jobs are now based in the U.S., and the company has signed several new contracts domestically in recent weeks.

If Ripple secures a victory in the Second Circuit Court, it could set a significant precedent for future cryptocurrency lawsuits. Alternatively, the case could end with a settlement or dismissal under the leadership of incoming SEC Chair Paul Atkins, who may adopt a different regulatory approach to cryptocurrencies.


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