Ripple resolute as SEC does not appeal verdict XRP is not a security, focuses on exchange sales

The egal clash continues as SEC challenges Ripple's executive actions on XRP token.

Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.

Ripple said there are no surprises in the US Securities and Exchange Commission’s (SEC) last-minute Civil Appeal Pre-argument statement (Form C) filing in their ongoing legal battle.

On Oct. 17, the SEC took further steps to appeal specific elements of Judge Analisa Torres’s ruling in its case against Ripple by submitting the long-awaited Form C to the US Court of Appeals for the Second Circuit.

Last year, Judge Torres’s decision favored Ripple in part, ruling that the company’s sales of XRP to retail investors on digital asset exchanges did not violate US securities laws. However, the court found that XRP sales to institutional investors did breach securities regulations.

What is the SEC appealing?

The SEC’s filing reveals that the regulator is not disputing the ruling regarding XRP sales to retail investors through exchanges. Instead, it focuses its appeal on other critical aspects of the decision.

According to the document, the SEC plans to contest Ripple’s programmatic sales of XRP on digital trading platforms and its distribution of XRP to employees and other parties.

The SEC also outlined its intent to pursue Ripple executives Brad Garlinghouse and Chris Larsen. The agency accused both of allegedly aiding and abetting XRP sales on digital platforms and intends to challenge their offers and sales of XRP.

Furthermore, the SEC has requested that the appellate court review these “de novo.” This means the court would address legal questions without deferring to the trial court’s judgment.

The filing stated:

“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’s and Larsen’s aiding and abetting of those offers and sales), Garlinghouse’s and Larsen’s personal offers and sales of XRP, and Ripple’s distributions of XRP in exchange for consideration other than cash. These issues are to be reviewed de novo.”

Interestingly, the SEC’s filing does not mention any intention to appeal the $125 million monetary penalty or the denial of disgorgement imposed by the court.

The SEC’s decision to appeal has drawn significant community attention, with many speculating about the timing of the filing. Despite concerns over potential delays, the filing comes about two weeks after the SEC initially signaled its intent to challenge the ruling.

Ripple response

Ripple’s Chief Legal Officer, Stuart Alderoty, responded to the SEC’s appeal, emphasizing that the ruling affirming XRP is not a security remains unchallenged.

He said:

“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.”

He added that Ripple plans to submit its cross-appeal next week.

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