Ripple Labs, the company behind the popular cryptocurrency XRP, is currently embroiled in a legal battle with the U.S. Securities and Exchange Commission (SEC) over the classification of XRP as a security. The case, which began in 2020, centers around allegations that Ripple unlawfully conducted unregistered sales of the token. As the litigation moves into the appeals stage, both Ripple and the SEC are gearing up for a protracted legal showdown that could extend well into 2026.
Key Milestone: Ripple’s Appeal and the SEC’s Next Moves
Ripple’s Chief Legal Officer, Stuart Alderoty, recently provided insights into the company’s next steps in the appeals process at the Swell conference. He highlighted that the SEC is required to submit Form C by October 16, 2024, outlining the aspects of the case they intend to challenge. Ripple is expected to submit its own Form C shortly after, detailing its cross-appeal strategy.
Ripple’s cross-appeal specifically targets the ruling related to institutional sales of XRP, which Judge Analisa Torres deemed to be unregistered securities transactions. The company aims to challenge this ruling, asserting that these institutional sales do not meet the criteria of “investment contracts” under U.S. securities law.
Timeline of the Appeals Process: What to Expect Next
Following the submission of Form C, the appeals process will unfold over several months. The SEC is expected to file its first brief within 90 days, likely by mid-January 2025, presenting its legal arguments against the lower court’s decision. Ripple will then respond with its own brief, continuing this back-and-forth of legal filings throughout 2025 until the case reaches a hearing in the U.S. Court of Appeals for the Second Circuit.
Ripple’s Focus: Institutional Sales of XRP
At the core of Ripple’s cross-appeal lies the question of whether institutional sales of XRP should be classified as unregistered securities transactions. Judge Torres differentiated between retail and institutional sales of XRP, finding that retail sales did not constitute unregistered securities offerings, but institutional sales did. Ripple disputes this conclusion, arguing that these transactions did not involve investment contracts or possess the rights and obligations typically associated with securities.
Impact on the Cryptocurrency Industry
The outcome of the Ripple-SEC legal battle could set a precedent that shapes the future regulation of cryptocurrencies and altcoins in the United States. Ripple’s assertion that XRP is not a security, if upheld by the Second Circuit, could influence how other tokens are regulated moving forward. The case has garnered attention from the digital asset community, as the final decision will likely impact how the SEC approaches enforcement actions against other cryptocurrency projects.
Ripple’s Global Expansion Amid Legal Challenges
Despite the ongoing legal saga in the U.S., Ripple is forging ahead with global expansion efforts. At the Swell conference, the company announced the launch of RLUSD, a stablecoin pegged to the U.S. dollar, designed to facilitate faster and more cost-effective cross-border payments. Issued under New York’s stringent regulatory framework, RLUSD underscores Ripple’s commitment to compliance in the evolving regulatory landscape surrounding digital assets.
The launch of RLUSD showcases Ripple’s dedication to innovation and regulatory adherence, solidifying its position as a key player in the digital payments industry. As the legal battle with the SEC unfolds, Ripple continues to navigate challenges while advancing its presence in the cryptocurrency space.