Ripple Appeals SEC’s Ruling Over ‘Institutional’ XRP Sales
On Friday, Ripple Labs officially filed a Form C with the United States Court of Appeals for the Second Circuit, where the company has been engaged in a long-term slugfest with the U.S. Securities and Exchange Commission. The form appeals them earlier ruling that Ripple’s institutional XRP sales to accredited investors were, in fact, securities sales.
An appeal was announced by Stuart Alderoty, the Chief Legal Officer of Ripple, via a post on social network X. He underlined that at this stage, them was not in a position to present any new evidence or request more disclosures from Ripple.
Appeal Against Institutional Sales Classification
The appeal is against an August decision by the US District Court for the Southern District of New York ordering Ripple to pay a fine of $125 million on the ground that institutional sales of XRP met the definition of a securities transaction using the Howey test—a legal standard to often determine whether or not an investment contract exists. Ripple thinks this interpretation is wrong and says that’s why the application of the Howey test onto digital assets like XRP needs re-evaluation.
Legal Grounds for the Appeal by Ripple
The filing of Form C by Ripple requests a de novo review from the lower court’s decision, hence affording the appeals court an opportunity to look at the legal issues of the case afresh. In requesting a de novo review, Ripple seeks to reverse the conclusions of the district court without being bound by its findings.
Alderoty also sounded optimistic about the appeal’s outcome when he referred to the SEC filings as “distraction and confusion” tactics. He added that such an appeal would bring clarity on cryptocurrency and institutional sales regulations.
The Greater SEC-Ripple War
This Form C filing represents Ripple’s response to a broader SEC challenge that started when the commission filed an appeal of a partial judgment in favor of Ripple. Most notably, the SEC failed to dispute the ruling that XRP is not a security in programmatic sales on digital exchanges, yet all along it has tried to have XRP labeled as a security in direct institutional sales.
The partial ruling by Judge Analisa Torres back in July 2023 pegged XRP’s status to one different from the programmatic ones on exchanges, stirring a lot of debate and setting off a deluge of legal implications within the crypto industry.
Ripple’s filing represents the latest salvo in a long battle that has seen the them attempts at regulating crypto closely watched and debated. The outcome of the appeal might set new precedents for how digital asset transactions will be classified, with Ripple determined to reshape regulatory interpretation for the broader crypto industry.
