The U.S. Securities and Exchange Commission (SEC) has intensified its legal battle against Ripple Labs by appealing a federal judge’s ruling that XRP sales to retail investors were not classified as unregistered securities offerings. This appeal, filed on January 15 with the Second Circuit Appeals Court, challenges Judge Analisa Torres’ July 2023 decision, which partially favored Ripple in the long-standing case.
The SEC argues that the district court erred in determining that XRP sales to retail investors via exchanges do not meet the definition of a security under the Howey test. The agency is pushing for a reversal, aiming to classify all XRP sales, including those for employee compensation and business deals, as securities.
Ripple’s Chief Legal Officer, Stuart Alderoty, dismissed the SEC’s arguments as a “rehash of already failed claims,” echoing CEO Brad Garlinghouse’s criticism of the agency’s persistence. Pro-crypto attorney Jeremy Hogan also weighed in, labeling the SEC’s brief as lackluster and devoid of substantial evidence proving XRP retail buyers were influenced by Ripple’s promotional efforts.
One definition of insanity….
— Brad Garlinghouse (@bgarlinghouse) January 16, 2025
Doing the same thing over and over and expecting different results. Gensler's SEC really took this to heart. https://t.co/giV8GiW6qV
The appeal comes amid Ripple’s counteraction to Judge Torres’ ruling, which imposed a $125 million civil penalty for XRP sales deemed securities when sold to institutional investors. Ripple argues that the SEC’s actions are inconsistent and overly aggressive.
Despite the ongoing legal wrangling, XRP has demonstrated resilience. The token’s price surged by 10% in the past 24 hours, reflecting broader optimism in the cryptocurrency market. Ripple’s community remains steadfast, with analysts predicting that the drawn-out appeals process may ultimately reaffirm the company’s partial victory.
As the legal drama unfolds, it could take months for the appeals court to render a decision. Both Ripple and the SEC are expected to present oral arguments, keeping the case in the spotlight and underscoring its potential to set a landmark precedent in cryptocurrency regulation.
Also Read: Uniswap and Ledger Partner to Enable Secure Token Swaps Directly in Ledger Live
The outcome of this appeal could have far-reaching implications, not just for Ripple, but for the entire crypto industry navigating the murky waters of U.S. securities law.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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