SEC Appeals Partial Ripple Victory in Ongoing XRP Legal Battle

TLDR:

• The SEC filed an appeal challenging parts of the July 2023 ruling that favored Ripple
• The appeal targets XRP sales on exchanges, distributions to employees, and executive sales
• The SEC is not contesting the $125 million fine imposed on Ripple
• The appeal could extend the case until early 2026
• Ripple is expected to file a cross-appeal next week

The U.S. Securities and Exchange Commission (SEC) has officially filed an appeal in its case against Ripple Labs, challenging key aspects of a July 2023 ruling that largely favored the cryptocurrency company.

The appeal, submitted on October 17, 2024, seeks to overturn parts of the decision made by U.S. District Judge Analisa Torres last year.

In July 2023, Judge Torres ruled that Ripple’s sales of its XRP cryptocurrency on digital asset exchanges and distributions to employees did not violate securities laws.

The judge also determined that sales by Ripple executives Brad Garlinghouse and Chris Larsen were not securities transactions. However, the court did find that Ripple’s institutional sales of XRP constituted unregistered securities offerings, resulting in a $125 million penalty for the company.

The SEC’s new filing indicates it will appeal several key points of the ruling. Specifically, the regulator is challenging the court’s decision regarding Ripple’s XRP sales on digital platforms, the personal XRP sales by Garlinghouse and Larsen, and Ripple’s distribution of XRP to employees and through its Xpring initiative.

The SEC is requesting a “de novo” review of these issues, meaning the appellate court will examine them anew without deference to the lower court’s findings.

The SEC is not contesting the $125 million fine imposed on Ripple for its institutional XRP sales. The regulator is also not appealing Judge Torres’ decision to deny its request for $876 million in disgorgement of Ripple’s profits.

The appeal process is expected to extend the already lengthy legal battle between the SEC and Ripple. According to Ripple’s Chief Legal Officer Stuart Alderoty, the case could now continue until July 2025. Ripple is anticipated to file its own cross-appeal next week, potentially challenging either the $125 million penalty or the ruling on institutional XRP sales.

Legal experts have offered mixed reactions to the SEC’s move. Some view it as a strategic decision focused on monetary aspects, while others criticize it as a “chicken move” for attempting to revive claims against Ripple executives after declining to pursue them at trial.

Despite the legal developments, the price of XRP has remained relatively stable, with only minor fluctuations reported in the wake of the SEC’s appeal filing.