SEC Insists XRP is Security. Appeals July Verdict
SEC appeals Ripple's favorable XRP ruling, challenging sales classification. Legal experts criticize SEC's approach amid potential lasting industry implications.
The U.S. Securities and Exchange Commission (SEC) has officially appealed the July 2023 ruling that mainly favored Ripple Labs regarding its XRP token. The appeal, filed in October 2024, disputes the court’s findings that XRP sales on exchanges and executive distributions do not constitute securities transactions. However, the SEC does not contest XRP’s overall no-security classification.
Judge Analisa Torres from the Southern District of New York previously ruled that while Ripple’s institutional sales of XRP were deemed unregistered securities offerings, other XRP sales on digital asset trading platforms, including by Ripple executives Brad Garlinghouse and Chris Larsen, were not investment contracts.
In its filing, the SEC challenged this part of the verdict, seeking a de novo review to potentially reverse the decision. According to attorney James Filan, the appeal questions whether Ripple’s offers and sales of XRP on exchanges and their executives’ sales should have been classified as securities. The SEC also disputes Ripple’s distribution of XRP’s employees as compensation, which the court ruled were exempt from securities classification.
The appeals timing suggests that the case could extend into 2026, leaving Ripple’s operations and future sales under the potential threat of stricter regulatory measures.
Legal Experts Criticize SEC Approach
Attorney Jeremy Hogan described the SEC’s decision to appeal the July ruling as a “chicken move,” stating that the Commission is attempting to breathe new life into claims it previously neglected to pursue.
Hogan highlighted that the SEC “completely folded” when it had the chance to fully address the case against Ripple executives Brad Garlinghouse and Chris Larsen in front of a jury, suggesting that the Commission missed a critical opportunity for a more assertive stance. The commentary reflects broader concerns over the SEC’s approach and its implications for future cryptocurrency regulations.
Ripple will file its cross-appeal to contest the $125 million penalty for institutional XRP sales, further complicating the legal battle. The outcome of this case will not only affect Ripple’s operations. Still, it could set a significant precedent for the regulatory treatment of other cryptocurrencies, marking a critical moment for the industry.
Moreover, as the situation develops, both sides await the appellate court’s review, which could significantly impact Ripple’s future and the broader crypto landscape.
