The SEC vs. Ripple Case has got to be one of the toughest and longest cases in the crypto space. It all started back in December 2020, when the U.S. Securities and Exchange Commission filed a lawsuit against Ripple Labs. Many people thought the case would be done and dusted by now, but it’s not.
Following the decision delivered by U.S District Judge Analisa Torres in October 2023, the United States Securities and Exchange Commission has filed a last-minute appeal on the same case involving Ripple Labs.
JUST IN: 🇺🇸 SEC DOES NOT APPEAL THE RULING THAT $XRP IS NOT A SECURITY!
— Good Morning Crypto (@AbsGMCrypto) October 18, 2024
"The Court’s ruling that “XRP is not a security” is NOT being appealed. That decision stands as the law of the land." - @s_alderoty
Ripple’s Form C will be filed next week! 🇺🇸 pic.twitter.com/5FsEPuca0v
Although the SEC seemed to have accepted Judge Torres's decision, it is now seeking to have certain parts of the summary judgment reversed.
Going back to the court’s decision at that time, Ripple was happy to hear that the court confirmed that its sales of XRP to retail investors on exchange platforms were not in violation of U.S. securities laws.
According to the court’s findings at the time, Ripple’s transactions were not of the magnitude that required an investment contract to be necessary. It was a disappointing judgment for the SEC in its efforts to keep cryptocurrency in check under the securities law.
The SEC’s new filing did not contest the court’s former decision on XRP sales to retail investors. Instead, the SEC has chosen to focus on other aspects of the judgment.
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.
— Stuart Alderoty (@s_alderoty) October 18, 2024
Stay tuned for Ripple’s Form C to be filed next week. https://t.co/m9molUGSBv
The first issue the SEC raised is the aspect where the court decided that Ripple’s sales and offer of XRP on trading platforms were not violations of the securities law. They also included the sales of XRP by two Ripple executives, Bradley Garlinghouse and Christian Larsen, in this same issue.
Another aspect the SEC also targeted in the filing was the court’s ruling that Ripple’s distribution of XRP in exchange for consideration in non-cash forms was not a clear breach of current securities laws.
Following the previous ruling, Ripple Labs has already been fined a $125 million civil penalty after the court held that the company’s sale of XRP to large investors violated US securities laws.
The court will review the SEC’s appeal de novo so that the appellate court can review and reconsider the lower court’s interpretation of the existing securities law in the case that was brought before it.
One can assume that the SEC would be happy with a de novo review, as it would require the appellate court to reconsider the issues in the case from scratch without deferring to the interpretations reached by the lower court.
However, despite the de novo review, Ripple’s victory in retail XRP sales is intact since it is not part of the appeal. Users have questioned the SEC’s case, however, as they believed the Commission missed a 14-day window for filing its Form C, which is mandated by law to be submitted within 14 days of filing the notice of appeal. However, the case is expected to extend to mid-2025.
Kataryna Habeliia
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