SEC files appeal against court ruling in Ripple case, challenging XRP sales on platforms and personal transactions by executives.
The U.S. Securities and Exchange Commission (SEC) has formally filed an appeal following a court ruling in its ongoing case against Ripple Labs. The SEC disagrees with the court’s decision that Ripple’s sales of XRP on digital asset platforms do not qualify as unregistered securities. The agency also questions the court’s finding that Ripple executives Brad Garlinghouse and Chris Larsen did not violate securities laws with their personal XRP sales.
On Thursday, the SEC filed a “Civil Appeal Pre-Argument Statement,” which indicated that it would appeal the ruling. The appeal tries to establish whether the U.S. District Court for the Southern District of New York has made legal mistakes. According to the SEC, the case should be considered a new, fresh case. Further, the SEC wants the case to be considered de novo, based on the application of law rather than facts.
Ripple’s Legal Battle Continues as SEC Seeks Appeal on XRP Ruling
The SEC’s appeal targets Ripple’s XRP sales on digital platforms and whether executives’ personal transactions breach securities laws. The agency also questions Ripple’s practice of trading XRP for non-cash considerations. These issues form the core of the SEC’s challenge to the court’s previous ruling.
Ripple’s Chief Legal Officer Stuart Alderoty took to his Twitter handle to set the record straight and tweeted in response to the confusion created by the decision. He said that the SEC appeal does not question this basic decision. “That decision is the law of the land,” Alderoty stressed.
The SEC filed its notice of appeal on October 2, stating that it is to conform with Supreme Court standards. Consequently, Ripple also filed a notice to cross-appeal to avoid the omission of any arguments. Alderoty pointed out that this was done to retain the given argument that an “investment contract” cannot exist without particular rights and obligations.
The legal fight started in 2020 when the SEC claimed that Ripple sold XRP to raise $1.3 billion without registering the cryptocurrency. In 2023, U.S. District Judge Analisa Torres dismissed the securities laws violation of certain XRP sales. However, direct sales to institutional investors were considered securities. In August, the court also fined Ripple $125 million.
Previously, the SEC sought an interlocutory appeal, but Judge Torres rejected it. This type of appeal occurs during an ongoing case. However, Torres ruled it would not significantly advance the litigation. Consequently, the SEC’s request was denied, and the case continued without interruption, allowing the court to focus on the primary issues at hand.
