The U.S. Securities and Exchange Commission (SEC) has filed an appeal at the last minute in its legal battle with blockchain development company Ripple Labs, seeking to overturn a partial summary judgment made by U.S. District Judge Analisa Torres over a year ago.
Judge Torres’ ruling, issued in July 2023, was partially favorable to Ripple, determining that the company’s sale of XRP tokens to retail investors on its digital asset platform did not violate U.S. securities laws. The court found that these transactions did not meet the legal standard for investment contracts, dealing a blow to the SEC’s broader efforts to regulate cryptocurrency sales under existing securities regulations. Additionally, the judge imposed a fine of approximately $125 million on Ripple after finding that its 1,278 institutional sales transactions violated securities laws.
In the appeal filed with the U.S. Second Circuit Court of Appeals on Thursday evening, the SEC did not challenge the aforementioned ruling. Instead, the agency focused on the part of the judgment that stated Ripple’s issuance and sale of XRP on digital asset trading platforms, as well as the personal sales activities of Ripple executives Bradley Garlinghouse and Christian Larsen, did not constitute illegal behavior. The SEC also disagreed with the ruling that Ripple’s distribution of XRP for non-cash consideration did not violate securities laws.
Ripple’s General Counsel, Stuart Alderoty, responded to the SEC’s filing on Thursday on the community platform X, stating, “This comes as no surprise — the court’s ruling that ‘XRP is not a security’ was not appealed and remains the law of the land.” Alderoty also mentioned that the company plans to submit their Form C next week.
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