Following the U.S. District Court's ruling in 2023 that 'Ripple's sale of XRP to retail investors does not violate securities laws,' the SEC formally submitted a statement of appeal on Wednesday after filing an appeal last October.

In documents submitted by the SEC on Wednesday evening, it expressed disagreement with the previous ruling of the U.S. Southern District Court of New York and requested the U.S. Second Circuit Court of Appeals to 'overturn' the district court's decision. The SEC stated:

The district court reasoned that institutional investors expect to profit from the efforts of others because Ripple has demonstrated its efforts to increase the price of XRP.

However, the district court mistakenly determined that retail investors do not have the same expectation, reasoning that they purchased XRP through cryptocurrency exchanges and thus do not know whether the seller is Ripple, Ripple-affiliated entities, or others.

In 2020, the SEC sued Ripple for raising $1.3 billion through the sale of XRP, claiming that 'XRP is an unregistered security.'

In 2023, Judge Analisa Torres of the U.S. Southern District Court of New York ruled that a portion of Ripple's XRP sales (specifically, this portion sold through an automated program) did not violate securities laws, reasoning that this portion was part of a 'blind bid process' (where the seller and buyer identities are unknown); however, the judge also ruled that other direct sales of XRP to institutional investors were considered securities, ordering Ripple to pay a $125 million fine.

Then in October 2024, the SEC filed an appeal in this case, stating that the district court's decision contradicts decades of Supreme Court precedents and securities law.

The SEC often cites the 'Howey Test' to determine whether a transaction qualifies as an investment contract and thus should be governed by securities laws. According to the SEC, when money is invested in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others, an 'investment contract' exists.

In this case, the SEC claims that Ripple has attempted for years to boost the demand for XRP through public statements, 'thereby increasing the price of XRP.' The SEC stated:

These claims would lead institutional investors who purchased XRP from Ripple, as well as all XRP investors, to reasonably expect profits from Ripple's efforts to boost the price of XRP. Statements from Ripple's website, social media platforms, and news reports are accessible to both retail and institutional investors.

The initial lawsuit against Ripple was initiated during the tenure of former SEC Chairman Jay Clayton, who was appointed by Trump, and has continued under the current chairman Gary Gensler.

Gensler has stated that he will step down as SEC chairman on the day Trump is inaugurated on January 20. It is currently unclear how the SEC will proceed with this lawsuit. Trump has nominated former SEC Commissioner Paul Atkins, who supports cryptocurrencies, to succeed Gensler as SEC chairman.

Ripple's General Counsel Stuart Alderoty described the SEC's lawsuit as 'just noise,' believing that the case will be resolved during the next administration.

Multiple positive developments supported by large purchases! XRP has surged past $3 for the first time in 7 years.

"The Ripple lawsuit is not over! The SEC requests the appellate court to 'overturn' the favorable ruling for Ripple". This article was originally published by (Blockcast).