SEC to Appeal Court Ruling in Ripple Case

The SEC is expected to appeal the recent court ruling in favor of Ripple Labs, focusing on the classification of XRP's secondary sales as securities.

Fox Business reporter Eleanor Terrett noted that the SEC may challenge the decision on programmatic sales, arguing these should be considered unregistered securities. An SEC spokesperson reiterated that securities laws apply to investment contracts regardless of the technology or labels used.

The anticipated appeal will also address the significantly reduced fine Ripple was ordered to pay. Judge Analisa Torres ruled that Ripple Labs must pay a $125 million penalty for unregistered XRP sales, much less than the SEC’s original demand of nearly $2 billion. Ripple’s leadership, including CEO Brad Garlinghouse, expressed relief at the outcome.

The ruling, issued in July 2023, has created friction between Ripple and the SEC. While Ripple saw the judgment as a victory, it did not establish a definitive legal precedent for other cryptocurrencies.

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A key unresolved issue is whether a written contract is required under the Howey test to deem an asset a security. Ripple argues that XRP cannot be classified as a security without such a contract, a position the SEC is likely to contest.

The case holds significant implications for the digital asset industry, potentially setting new regulatory standards in the U.S.

Alexander Stefanov