SEC Files Appeal Against Ripple Case
The SEC has filed an appeal to overturn the ruling that Ripple's XRP is not a security in retail transactions.
As reported, in July 2023, the court ruled that XRP can only be considered a security in transactions sold directly to investment funds or third parties, and dismissed the SEC's appeal in August 2023. This ruling is considered an important victory for Ripple and the entire cryptocurrency industry.
In the face of the unfavorable ruling, many legal experts predicted that the SEC would continue to appeal. As expected, on October 2, 2024, under the leadership of Chairman Gary Gensler, the US Securities and Exchange Commission (SEC) once again filed an appeal to the Court of Appeals, continuing its four-year legal battle with Ripple.
The SEC’s move comes less than two months after Judge Analisa Torres imposed a $125 million fine on Ripple for selling securities through the XRP token. However, enforcement of the fine has been temporarily suspended pending appeals or a ruling from the appeals court.
In a statement, an SEC spokesperson said:
“We believe the trial court’s ruling conflicts with numerous Supreme Court precedents and the securities laws, and we will continue to defend our position before the appeals court.”
Shortly after the SEC filed its appeal, Ripple representatives were quick to speak out. Ripple CEO Brad Garlinghouse posted on X, emphasizing that:
“The SEC lost on every important count. Ripple, the industry, and the law have won. XRP is now determined not to be a security.”
Ripple Chief Legal Officer Stuart Alderoty also shared that while the SEC’s appeal was “disappointing but not surprising,” he remains confident that the Court of Appeals will uphold the Trial Court’s ruling.
Although the SEC has filed a notice of appeal, a formal appeal has not yet been filed. In many other legal cases, such as the Sam Bankman-Fried case, appeals are typically filed months after the notice of appeal is filed.
On the same day, Bitwise formally filed its application for an XRP spot ETF. If the appeal results in a ruling in the SEC’s favor, the likelihood of an XRP ETF being approved could be negatively impacted. Conversely, if Ripple continues to prevail, the approval process could be expedited once regulatory clarity is achieved.
In other news, the SEC announced that Director of Enforcement Gurbir Grewal will step down on October 11, 2024. Grewal has been known for his hardline stance, bringing more than 100 crypto-related lawsuits during his tenure. Deputy Director Sanjay Wadhwa will take over the role on an interim basis until a permanent replacement is found.
Grewal's resignation comes amid growing political pressure on the SEC, especially as the 2024 presidential election approaches. Candidate Kamala Harris has pledged to support the crypto industry if elected, while Donald Trump has bluntly vowed to "fire" SEC Chairman Gary Gensler if he returns to the White House. Gensler is also being heavily criticized by lawmakers as the "most destructive" SEC Chairman in history.
XRP is down 11% in the past 24 hours, partly due to news that the SEC will appeal the ruling in its lawsuit against Ripple, and partly following the downward trend of the crypto market.
