Ripple’s XRP Lawsuit Enters New Chapter as Both Parties File Appeals

TLDR:

• SEC appealing Judge Torres’ ruling in Ripple case
• Ripple filed cross-appeal on institutional sales decision
• Next step: SEC to file Form C detailing appeal scope
• Briefing process could last until July 2025
• Final appellate court decision possible in early 2026

The Securities and Exchange Commission (SEC) and Ripple Labs are gearing up for the next phase of their legal battle over XRP, as both parties have filed notices to appeal different aspects of Judge Analisa Torres’ ruling from July 2024.

The case, which has significant implications for the cryptocurrency industry, is now moving to the U.S. Court of Appeals for the Second Circuit.

Stuart Alderoty, Ripple’s Chief Legal Officer, expressed confidence in the company’s position as the case moves forward. “I felt good about our case in the Southern District of New York. I feel even better about our case in the Second Circuit,” Alderoty stated in a recent interview.

He believes the SEC’s appeal will ultimately “backfire” and benefit the crypto industry as a whole.

The appeals process is set to begin with both parties filing Form C documents, which will outline the specific aspects of Judge Torres’ ruling they intend to challenge. The SEC is due to file its Form C on October 16, 2024, with Ripple following suit seven days later. These filings will provide clarity on the focus of each party’s appeal.

Following the Form C submissions, a briefing schedule will be established. The SEC will have 90 days to submit its comprehensive legal argument explaining why it believes Judge Torres erred in her decision. Ripple will then have the opportunity to respond to the SEC’s arguments and file its own opening cross-appeal brief.

Alderoty estimates that the briefing process could extend until July 2025, approximately nine months from now. This timeline suggests that a final decision from the appellate court might not come until early 2026, unless the parties reach an agreement to end the legal dispute sooner.

The case has drawn significant attention due to its potential to set precedent for how securities laws are applied to token issuers, particularly within the Southern District of New York, a major financial hub. Judge Torres’ initial ruling found that XRP is “not necessarily a security on its face,” a decision that has been met with both support and skepticism from other judges in similar cases.

While Ripple celebrated aspects of Judge Torres’ ruling, the company was ordered to pay a $125 million fine over XRP transactions that were found to have violated securities laws. The SEC had initially sought a much larger penalty of $2 billion.

As the case moves to the appellate level, both parties are preparing to argue their positions. The SEC maintains that Judge Torres’ ruling “conflicts with decades of Supreme Court precedent and securities laws.”

Ripple, on the other hand, plans to argue that for a digital asset to be considered an investment contract, a contract with rights and obligations is necessary.