SEC escalates Ripple battle with new appeal, challenges key XRP ruling

The U.S. Securities and Exchange Commission (SEC) has officially appealed a previous judgment in its ongoing legal battle with Ripple Labs. The agency submitted a “Civil Appeal Pre-Argument Statement,” also known as Form C, appealing Judge Analisa Torres’ ruling on XRP.

This move has reignited the legal debate over whether XRP sales on cryptocurrency exchanges should be classified as securities. The SEC’s initial lawsuit charged Ripple and its officials with breaching portions of the Securities Act of 1933 by marketing and selling XRP without proper registration.

SEC requests clarification and a “de novo” review of the XRP case

The agency is now seeking clarification on whether the United States District Court for the Southern District of New York made an error in proceedings involving Ripple CEO Brad Garlinghouse and co-founder Chris Larsen. The SEC also requested that the issues be examined “de novo,” which means the court reviews a decision based on questions about how the law was implemented. 

Ripple’s Chief Legal Officer, Stuart Alderoty, responded to the SEC’s filing in a post on X, noting that the firm plans to file its Form C next week.

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. – Stuart Alderoty

Ripple files a cross-appeal to address legal complexities

The SEC filed its initial appeal on October 2, arguing that the district court’s decision in the Ripple case contradicts decades of Supreme Court precedent and securities laws.

An SEC spokesperson expressed confidence in their case, stating that they believe that the district court decision in the Ripple matter conflicts with decades of Supreme Court precedent and securities laws and look forward to making their case to the Second Circuit.

After the SEC’s appeal was filed, Ripple responded by putting forward a cross-appeal to ensure all aspects were thoroughly examined and addressed, per Alderoty’s explanation regarding the necessity of rights and obligations in defining an “investment contract.”

The legal battle dates back to 2020 when the SEC accused Ripple of raising $1.3 billion through unregistered XRP sales. In a pivotal decision over a year ago, Judge Torres ruled that Ripple’s programmatic sales of XRP—conducted through a blind bid process—did not violate securities laws.

However, she determined that direct XRP sales to institutional investors did qualify as securities. Ripple was subsequently ordered to pay $125 million in fines in August.

The SEC previously sought an interlocutory appeal, which Judge Torres rejected, stating that the SEC had not demonstrated how the appeal would “materially advance the ultimate termination of the litigation.”