Ripple files notice of cross-appeal in SEC lawsuit

Ripple Labs' latest legal move could reshape US digital asset regulations.

Key Takeaways

• Ripple Labs has filed a cross-appeal with the US Court of Appeals.
• The legal action could impact the regulatory framework for digital assets in the US.

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Ripple Labs has filed a notice of cross-appeal in its ongoing legal battle with the US Securities and Exchange Commission (SEC). The filing, submitted to the US Court of Appeals for the Second Circuit, is Ripple’s bid to challenge certain aspects of the Aug. 7 final judgment.

The court ruling in August ordered Ripple to pay a $125 million civil penalty to resolve charges over the institutional sales of XRP tokens. The fine, although higher than Ripple’s proposed $10 million, is substantially less than the nearly $2 billion initially sought by the SEC, which included extensive disgorgement and prejudgment interest.

The court also determined that XRP tokens sold on secondary markets were not securities.

Ripple’s cross-appeal follows the SEC’s appeal of its lawsuit against Ripple earlier this month. The SEC is looking to challenge Judge Analisa Torres’ ruling that programmatic sales of XRP to retail investors did not violate securities laws.

Following the SEC’s move, Ripple Chief Legal Officer Stuart Alderoty said the company considered filing a cross-appeal to continue their fight. Both appeals would be merged into a single case before the Court of Appeals.

SEC’s appeal is based on weak arguments: Ripple CLO

Ripple CEO Brad Garlinghouse is confident that his team will win the appeal and the prospective victory will put an end to the SEC’s “regulation-by-enforcement” agenda.

In a statement following Ripple’s latest filing, Garlinghouse argued that the SEC, instead of providing clarity to industry players, was intentionally focused on causing disruption and harm to the sector.

“With our cross-appeal today, we’re looking forward to sealing the SEC’s fate and finally putting an end to the SEC’s regulation-by-enforcement agenda. Ripple was the industry leader in the first go-round in court and we look forward to leading the way in this round as well,” he said.

Ripple CLO Stuart Alderoty stressed that the SEC’s appeal was based on weak arguments. Alderoty believes the Ripple team will be able to successfully defend their position in court.

“The SEC lost on all key points—that’s why they appealed. Today, Ripple filed a cross-appeal to ensure nothing’s left on the table, including the argument that there can’t be an “investment contract” without there being essential rights and obligations found in a contract,” Alderoty noted.

“Last year, the SEC unsuccessfully tried to take an early appeal of the rulings that Ripple’s XRP sales on exchanges and Ripple’s other XRP distributions, like to employees and developers, weren’t securities. They’ll likely go after these again – and they will lose on both again,” he added.

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