Key takeaways
- The SEC’s appeal does not challenge XRP’s classification as a non-security, but challenges other aspects of the ruling.
- The appeals court will conduct a de novo review of the SEC’s claims against Ripple’s XRP transactions.
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The SEC is appealing the July 2023 ruling that found that Ripple’s XRP sales on digital asset platforms, executive sales, and other XRP distributions did not constitute investment contracts, according to a new presentation shared by attorney James Filan.
“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 and Larsen’s aiding and abetting in those offers and sales ), Garlinghouse and Larsen’s personal offers and sales of XRP and distributions of XRP by Ripple in exchange for non-cash consideration These issues should be reviewed de novo,” the document wrote.
In July 2023, Judge Analisa Torres of the United States District Court for the Southern District of New York ruled that Ripple’s institutional sales of XRP were unregistered securities offerings.
However, the judge also determined that Ripple’s sales of XRP on digital asset trading platforms and sales of XRP by Ripple executives Brad Garlinghouse and Chris Larsen did not constitute securities transactions.
The court also ruled that Ripple’s XRP distributions for employee compensation and its Xpring initiative were exempt from securities classification.
Following the ruling, Ripple was ordered to pay a fine of $125 million for unregistered securities offerings through institutional sales of XRP. This figure was less than the SEC’s initial request of nearly $2 billion and was expected to end the long-running legal dispute.
Now the SEC has decided to appeal part of the ruling that favored Ripple, potentially extending the case until early 2026. If the SEC prevails, Ripple could face additional sanctions or operating restrictions.
Commenting on the SEC’s latest filing, legal expert Jeremy Hogan called the SEC’s decision to appeal a “chicken move.”
“The SEC completely failed when it had the opportunity to try the case against Garlinghouse and Larsen in front of a jury. And now he’s trying to revive those claims. In my opinion, the chicken moves,” Hogan. fixed.
“What do I like? This appeal is about money. “The court order could change if Ripple lost, but only indirectly (in terms of compliance with the order),” he added.
James Murphy, a renowned crypto lawyer, said he was “slightly” surprised that the SEC “has not appealed the $0 refund ruling.” The court previously denied the SEC’s request to disgorge $876 million in Ripple profits, limiting the SEC’s ability to seek large disgorgement penalties.
Following SEC Form C filing, Ripple is expected to file its own Form C for a cross appeal next week. The company could challenge the $125 million fine or the ruling that institutional sales of XRP were securities.
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