XRP's Ripple Labs has filed a cross-appeal against the SEC's decision.
Ripple aims to maintain the favorable ruling that XRP is not a security in all contexts.
The SEC is mainly challenging the personal XRP sales made by Ripple executives Brad Garlinghouse and Chris Larsen.
XRP's Non-Security Status remains unchallenged with the SEC focusing instead on the specifics.
The appeals process is expected to extend into 2025.
The long-standing legal battle between Ripple Labs and the US Securities and Exchange Commission has become a lot more heated lately.
Ripple Labs as it stands, has filed a cross-appeal against the SEC.
This legal battle, which has been active for several years now hinges on whether or not XRP, Ripple’s native crypto is a security.
Here are all the key updates:
On 16 October this week, Ripple Labs officially filed a cross-appeal with the U.S. District Court for the Southern District of New York.
The company is seeking to maintain the decision by U.S. District Judge Analisa Torres in August this year.
Recall that in her ruling, Judge Torres ordered Ripple to pay a $125 million fine in what appeared to be the end of the four-year legal battle.
Ripple’s CEO, Brad Garlinghouse even hailed the outcome as a partial victory because the SEC initially demanded a staggering $2 billion.
Victory for Ripple
The SEC appealed the $125 million fine, and Ripple has responded with a cross-appeal.
Ripple’s cross-appeal aims to prevent the SEC from holding it liable for the $728 million institutional XRP sales from 2017.
The SEC as it stands, continues to insist that this sale was an unregistered securities offering.
For some context, recall that the SEC originally sued Ripple in 2020.
The US agency accused the company of raising $1.3 billion through the unregistered sale of XRP as a security.
However, an earlier decision from 2023 introduced one of the first milestones to the mix.
Judge Torres found that XRP as a digital asset, is not "necessarily a security" in every context.
For instance, the institutional sales of the cryptocurrency were determined to be violations.
On the other hand, programmatic sales on digital exchanges and XRP given to employees did not violate securities laws.
This original ruling has been the cornerstone of the endless lawsuits and appeals that have surfaced this year.
Ripple continues to argue that XRP should not be classified as a security based on how it was sold:
The SEC, on the other hand, wants Ripple to face full prosecution for the 2017 sales.
Ripple’s Chief Legal Officer, Stuart Alderoty explained that the cross-appeal is part of a broader strategy to ensure all unresolved issues are addressed.
On Twitter (X), the lawyer stressed the importance of this legal move.
In his words, the company wants to make sure “nothing’s left on the table.”
The ongoing debate is centered on whether or not XRP can be legally considered as an investment contract.
If it can, this would classify the cryptocurrency as a security under U.S. law.
So far, crypto advocates have argued that without specific rights and obligations in a contract, XRP cannot be deemed a security.
Alderoty emphasized in the tweet, that this argument is very important for defending Ripple’s sales practices and protecting XRP’s status in the market.
Amid the confusion, it is important to note that the regulator did not challenge Judge Torres’ decision that XRP (in some contexts) is not a security.
Instead, the SEC is focusing on other areas like the personal XRP sales by Ripple executives Brad Garlinghouse and Chris Larsen.
The agency claims that these sales violated securities laws. Furthermore, Garlinghouse and Larsen “aided and abetted” Ripple’s “violations”.
The SEC is also challenging the court’s ruling on the non-security status of XRP sales on exchanges.
Said legal battle is showing no signs of ending soon.
According to legal experts, the appeals process is expected to stretch well into 2025. Ripple is preparing to file its own Form C in response to the SEC’s appeal. Both parties will then agree on a briefing schedule.
According to a timeline shared by Fox Business producer Eleanor Terrett, the SEC will have up to 90 days to submit its first brief.
Details from Stuart Alderoty
Thereafter, Ripple will have a chance to respond accordingly.
Ripple’s legal team (led by Alderoty) expects that this process will take the full 90 days.
To put things simply, the ongoing dispute could remain unresolved until mid-2025.
Overall, the outcome of the ongoing Ripple-SEC legal battle could have major implications for the crypto industry as a whole.
XRP’s partial victory in court last summer provided some clarity on its status. However, the ongoing back and forths in appeal courts may have long-standing implications for crypto in the U.S.
Ripple (as maintained by its executives) remains committed to defending XRP’s status as a non-security.
The company is also pursuing every legal means to challenge the SEC’s allegations.
As the case progresses, the industry will be closely watching these decisions that could affect the future of crypto for decades to come.
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