- The SEC filed an appeal in its case against Ripple but did not challenge the ruling that XRP is not a security.
- The appeal focuses on XRP sales by Ripple’s executives and certain other aspects of the court’s previous decision.
The U.S. Securities and Exchange Commission (SEC) has filed an appeal related to its ongoing legal case against Ripple, but it has not contested the ruling that XRP is not classified as a security. This appeal follows the court’s partial summary judgment, which favoured Ripple in a significant aspect of the case.
SEC Challenges Ripple Executives’ XRP Sales
The SEC recently filed a Form C civil appeal with the specifications of certain decisions of the U.S. District Court for the Southern District of New York. The court had ruled earlier in July that sales of XRP through automated software on digital trading platforms were not securities under federal law. This ruling, which is decisive for Ripple, has not been challenged by the SEC in the appeal.
The SEC’s latest move also questions other aspects of the court’s ruling, such as the XRP sales conducted by Ripple executives, including Brad Garlinghouse and co-founder Chris Larsen. The SEC notes that these sales were carried out allegedly in violation of the securities laws.
The appeal also challenges the compatibility of XRP distributions conducted by Ripple in exchange for non-cash consideration. On these issues, the regulatory body has requested the court to review the matter afresh and consider the rules in the absence of the regulations (“de novo”).
Ripple’s Chief Legal Officer Stuart Alderoty clarified on X (formerly Twitter) that the SEC is not appealing the court’s decision on XRP as security. Alderoty znakomity that this part of the ruling “stands as the law of the land,” which helped Ripple maintain that the XRP token has a solid legal basis. In response, Ripple is set to file its Form C.
No surprises here — once again it’s been made clear. The Court’s ruling that “XRP is not a security” is NOT being appealed. That decision stands as the law of the land.
Stay tuned for Ripple’s Form C to be filed next week.
— Stuart Alderoty (@s_alderoty) October 18, 2024
Legal Process Expected to Continue Through 2025
The time frame for the appeal is also expected to take a while, with Ripple filing its response about one week after the filing of the SEC. Following the setting of a briefing schedule by both parties, the SEC has 90 days to file its first brief, as reported by Eleanor Terrett, a Fox Business producer. Ripple’s legal team estimates that the process could continue until July 2025 because the appeals would likely take time to be reviewed and answered.
NEW: Just had a great chat with @s_alderoty of @Ripple who gave me a rundown of the appeals timeline.
Ten @SECGov’s last day to file Form C (which will give some level of detail about what it plans to appeal) is tomorrow.
Seven days later, Ripple will file its own Form…
— Eleanor Terrett (@EleanorTerrett) October 15, 2024
This legal development comes after a major ruling in August whereby Judge Analisa Torres determined that Ripple had made violations of certain provisions in the Securities Act of 1933. The company was also required to pay a civil penalty of $125 million and was restrained from further violation of Section 5 of the Act. Nonetheless, the partial summary judgment in Ripple’s favour regarding the classification of XRP as non-security on exchanges was a significant legal victory for the firm.
Legal analysts including the attorney Jeremy Hogan have also pointed out that the SEC has made it seem like their appeal is to seek higher financial penalties against Ripple. Hogan opined that if the SEC wins, the injunction concerning the future sales of XRP by Ripple’s institutions may be widened thereby affecting its compliance with the securities laws.
I’ve never been so excited to get a “C” since I was in high school math.
What is NOT being appealed: That XRP is not a Security.
What is being appealed: Ripple’s sales of XRP on exchanges and the use of XRP as a kind of payment.
What does “De Novo” mean? It means the appellate… pic.twitter.com/ssSlxblSfy
— Jeremy Hogan (@attorneyjeremy1) October 17, 2024