Ripple Labs has officially filed a cross-appeal with the U.S. Court of Appeals for the Second Circuit, contesting key aspects of a recent ruling in its ongoing legal battle with the Securities and Exchange Commission (SEC). This move follows the SEC’s appeal a week prior, which targets specific elements of a 2023 court decision that partially favored Ripple regarding its sale of XRP to investors.
The appeals process, expected to unfold over the next year, has garnered considerable attention due to its potential ramifications for the regulation of digital assets in the United States.
Stuart Alderoty, Ripple’s chief legal officer, expressed confidence in the company’s position, stating, “The Appeals Court reviews the record that has already been set and we have a great record.” He added, “The SEC can’t submit new evidence or ask us to produce more. Meaning, there won’t be all the drama we had in the litigation when we fought over documents.”
In its filing, dated Thursday, Ripple outlines four critical issues it intends to address. Central to its argument is the claim that its institutional sales of XRP should not be classified as unregistered securities offerings, which led to a significant $125 million fine. Ripple contends that the U.S. Southern District Court of New York, presided over by Judge Analisa Torres, misapplied the definition of an “investment contract” as per the 1933 Securities Act.
Specifically, Ripple disputes the requirement that an investment contract must impose post-sale obligations on the seller and provide buyers with a right to profit from the seller’s efforts. The company also argues that the court did not adequately consider the broader regulatory uncertainty regarding the applicability of securities laws to cryptocurrency.
Ripple asserts that the SEC failed to give fair notice that the sale of XRP would constitute a violation of these laws, raising significant legal questions about how securities regulations apply to digital assets.
On the other hand, the SEC is appealing the dismissal of charges related to Ripple’s programmatic XRP sales on digital exchanges, as well as its distributions to employees, arguing these actions violated securities laws. The regulator is particularly focused on whether Ripple’s executives, Brad Garlinghouse and Chris Larsen, engaged in unregistered sales.
Importantly, the SEC has not contested the district court’s finding that XRP itself is not classified as a security, a ruling that represents a notable victory for Ripple in this ongoing dispute.
October 2024, Cryptoniteuae
