Highlights:
- SEC appeals Judge Torres’ ruling on XRP, reigniting securities debate.
- The agency challenges court decisions that cleared Ripple executives.
- Ripple plans to file its Form C next week, according to Stuart Alderoty.
On October 17, the United States Securities and Exchange Commission (SEC) officially appealed a previous judgment in its lawsuit against Ripple over XRP. The agency submitted a Civil Appeal Pre-Argument Statement (Form C) to the U.S. Court of Appeals for the Second Circuit, appealing Judge Analisa Torres’ ruling on XRP.
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🚨NEW: The @SECGov has filed its Form C, detailing issues they plan to seek appeal for in the @Ripple case. Those issues are:
📌@Ripple’s programmatic sales of $XRP on digital asset trading platforms
📌@bgarlinghouse and @chrislarsensf alleged aiding and abetting of those… https://t.co/EArrDrbkBr
— Eleanor Terrett (@EleanorTerrett) October 17, 2024
Four-year Legal Battle
In 2020, the SEC sued Ripple Labs, claiming it sold XRP as an unregistered security. In July 2023, Judge Analisa Torres ruled that Ripple’s institutional XRP sales were unregistered securities. However, XRP sales on trading platforms and by executives Brad Garlinghouse and Chris Larsen were not considered securities. Ripple’s XRP distributions for employee compensation and the Xpring initiative were also exempt from securities classification.
The SEC sought over $876 million in disgorgement, over $198 million in interest, and an $876 million civil penalty. Ripple argued that its maximum liability should be capped at $10 million. The court ultimately levied a civil penalty of $125 million against Ripple.
On October 2, the U.S. SEC appealed this decision, arguing that the district court’s ruling contradicts years of Supreme Court precedent and securities laws. The SEC contends that XRP should be classified as a security for all sales, including both institutional and retail transactions, emphasizing that the classification must remain consistent regardless of the transaction type. Ripple Labs filed a notice of cross-appeal with the U.S. Court of Appeals for the Second Circuit on October 10, continuing its legal battle with the SEC.
SEC Requests “De Novo” Review of the XRP Case
In Thursday’s filing, the agency stated it is examining whether the U.S. District Court for the Southern District of New York made an error, particularly regarding Ripple CEO Brad Garlinghouse and co-founder Chris Larsen. The SEC also requested that the issues be reviewed “de novo,” meaning it seeks a fresh examination of how the law was applied in this case.
The filing read:
“Whether the district court erroneously granted partial summary judgment in favor of defendants with respect to Ripple’s offers and sales of XRP on digital asset trading platforms (and Garlinghouse’s and Larsen’s aiding and abetting of those offers and sales), Garlinghouse’s and Larsen’s personal offers and sales of XRP, and Ripple’s distributions of XRP in exchange for consideration other than cash.”
Alderoty Confirms Ripple Will File Form C Next Week
Ripple’s Chief Legal Officer Stuart Alderoty addressed the SEC’s form in a post on X on Thursday. He confirmed that the firm plans to file its Form C next week. Alderoty mentioned in the post that there were no surprises and emphasized that the Court’s ruling declaring “XRP is not a security” is not under appeal. He asserted that this decision remains the law of the land.
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. https://t.co/m9molUGSBv
— Stuart Alderoty (@s_alderoty) October 18, 2024
The SEC has chosen to appeal part of the ruling that favored Ripple, potentially prolonging the case until early 2026. If successful, Ripple could face further penalties or operational limitations. Legal expert Jeremy Hogan criticized the SEC’s decision to appeal, calling it a “chicken move.”
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… https://t.co/DBsQpi8kVi pic.twitter.com/ssSlxblSfy
— Jeremy Hogan (@attorneyjeremy1) October 17, 2024
XRP Sees Price Decline
XRP experienced a minor decline of 2.01% in the past day, currently trading at $0.5475. Its trading volume also dropped by 8.61%, reaching $1.22 billion at the time of writing.
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