Ripple Labs has taken a significant step in its legal battle with the US Securities and Exchange Commission (SEC) by filing a notice of cross-appeal to the United States Court of Appeals for the Second Circuit on Oct. 10. This move comes in response to the SEC’s own appeal, which aims to overturn a court ruling that found programmatic sales of XRP to retail investors did not violate securities laws.
The merging of both appeals into a single case will further prolong the legal proceedings that have garnered widespread attention within the crypto industry since the SEC first filed its complaint in 2020. Ripple’s cross-appeal challenges the final judgment that required the company to pay $125 million in civil penalties related to its institutional sales of XRP tokens. While this penalty was lower than the SEC’s initial demand of nearly $2 billion, it was still significantly higher than Ripple’s proposed $10 million settlement.
Stuart Alderoty, Ripple’s chief legal officer, expressed on social media that the cross-appeal is intended to leave no stone unturned and ensure that all aspects of the case are thoroughly addressed. He anticipated that the SEC would likely argue that XRP sales on exchanges and token distributions to employees and developers should be classified as securities. Alderoty also expressed optimism about the outcome of the appeal, stating that he looks forward to the federal court of appeals definitively ending the SEC’s regulatory overreach.
Ripple CEO Brad Garlinghouse echoed Alderoty’s sentiments, accusing the SEC of causing chaos and avoiding providing clarity to the crypto industry players in the US. With the filing of the cross-appeal, Ripple aims to bring closure to the SEC’s enforcement tactics and put an end to what they perceive as regulatory overreach.
The legal battle between Ripple and the SEC has spanned over four years, beginning with the SEC’s lawsuit against Ripple in December 2020. The lawsuit alleged that Ripple had illegally offered unregistered securities through its XRP token, amounting to $1.3 billion. After years of litigation, a judge ruled in Ripple’s favor in July 2023, determining that while institutional sales of XRP violated securities laws, programmatic sales and other distributions of XRP to retail investors did not constitute securities offerings.
Following this ruling, the SEC sought remedies, including a $2 billion fine, which was partially rejected by the court in August 2023. Instead, Ripple was ordered to pay a $125 million fine, and it was determined that XRP sales to retail investors did not breach securities laws. The SEC’s subsequent appeal prompted Ripple to file its own cross-appeal, continuing the legal battle between the two parties.
This ongoing legal saga highlights the complexities and uncertainties surrounding the regulatory landscape for cryptocurrencies in the US. As both Ripple and the SEC continue to navigate these legal challenges, the outcome of the appeals process will undoubtedly have far-reaching implications for the broader crypto industry.