SEC Files Last-Minute Appeal in Ripple (XRP) Ruling

After a period of uncertainty and debate, the Securities and Exchange Commission (SEC) has officially lodged an appeal in its ongoing litigation with Ripple Labs.

This appeal is contesting specific elements of Judge Analisa Torres’ 2023 summary judgment, which determined that Ripple’s sales of its XRP token to retail investors on crypto exchanges did not violate U.S. securities laws.

Ripple Executives Under SEC Scrutiny in Appeal

While many had anticipated the SEC to challenge the court’s ruling that programmatic sales of XRP did not qualify as an investment contract, the agency instead decided to concentrate on other significant aspects of Judge Torres’ decision.

One focal point of the appeal is the court’s conclusion that Ripple’s offerings and sales of XRP on cryptocurrency platforms, along with the personal trades made by company executives like Brad Garlinghouse and Chris Larsen, did not transgress securities laws.

The regulator is also arguing against the ruling that there was no breach of securities laws when the crypto payment provider distributed XRP in exchange for non-cash assets.

In the same ruling, Ripple’s institutional sales of XRP were found to have violated securities laws, resulting in the company being fined $125 million for that infraction.

The SEC filed a notice of appeal on October 2 and, according to regulations, had a 14-day deadline to submit Forms C and D. These forms were anticipated to clarify the specific aspects of Judge Torres’ judgment that the agency plans to contest.

Controversy Surrounds Delayed Filing

When the expected deadline arrived without any action from the regulator, it led to widespread speculation in the community, with many questioning whether the agency had intentionally jeopardized its long-standing case against the crypto firm.

Some experts expressed concern that a failure to submit the required documents in a timely manner might lead to the appeal being outright dismissed, potentially ending the SEC’s efforts to overturn Judge Torres’ conclusions.

The unexpected delay was particularly surprising considering the agency’s usual reliability and the high profile of the Ripple case.

Furthermore, when the SEC finally filed its Form C, it was dated October 16, while the court’s file stamp on the document indicated October 17, fueling speculation that the agency might have missed its deadline. Nevertheless, Fox journalist Eleanor Terrett pointed out that the appeal notice could have been filed on October 2 but appeared on the docket on October 4, suggesting that the actual deadline was October 18 at 11:59 PM.

Regardless of the situation, legal experts like MetaLawMan indicate that the 2nd Circuit Court of Appeal must now determine whether the SEC’s filing was submitted within the allowed timeframe.

For its part, Ripple has a week to respond to the filing, with Chief Legal Officer Stuart Alderoty stating that the company intends to do so next week.