The U.S. Securities and Exchange Commission (SEC) has filed its opening brief in the ongoing lawsuit against Ripple Labs. The appeal challenges a previous court ruling that declared XRP, Ripple’s cryptocurrency, is not a security when sold to retail investors.
SEC Challenges Court Ruling on XRP
The SEC’s appeal argues that Ripple’s sales of XRP, even on digital exchanges, should be classified as unregistered securities offerings. In July 2023, Judge Analisa Torres rejected this position and ruled in Ripple’s favor. She said that XRP sales to the public do not meet the criteria of investment contracts under U.S. securities laws. Ripple’s leadership has strongly criticized the SEC’s move, labeling it as a repetition of previously failed arguments.
Ripple CLO Calls SEC Appeal “Just Noise”
Ripple’s Chief Legal Officer (CLO), Stuart Alderoty, referred to the appeal as “just noise.” He also predicted that the next U.S. administration and SEC Chair will abandon this appeal.
Ripple CEO Brad Garlinghouse agreed with Stuart Alderoty, calling the SEC’s persistence a definition of “insanity” for reusing the same approach while expecting different results.
Ripple is also filing a cross-appeal in the case. While the company secured a major victory for retail sales of XRP, the court had ruled in favor of the SEC on institutional sales, stating these sales were investment contracts. Ripple’s cross-appeal seeks to overturn this decision, arguing that transactions can only be classified as investment contracts if they include contractual obligations and rights.
Ripple emphasized that the SEC’s appeal does not challenge the core decision that XRP itself is not a security. This aligns XRP with Bitcoin and Ethereum, which have also been labeled as non-securities in the past.
The appeals court process may take several months to conclude. Ripple will have the chance to present written counter-arguments, and the court might also hold oral arguments before reaching a decision.
Will Change in SEC Chair Help Ripple?
The SEC is undergoing a leadership transition as Gary Gensler steps down on January 20. His successor, Paul Atkins, is expected to bring a more crypto-friendly approach. Ripple views this change as a potential turning point, with Alderoty suggesting that future SEC administrations may not pursue the current appeal.
Despite the legal battle, Ripple continues to expand its partnerships and use of XRP in cross-border payments.
