The United States Securities and Exchange Commission has filed its first brief in order to contest a ruling that favored Ripple.
In its Jan. 15 filing, the SEC claims that Ripple’s XRP sales to retail buyers should be classified as unregistered securities transactions.
The SEC has a number of recommendations:
“The district court erred both factually and legally in concluding that defendants’ offers and sales of XRP to public buyers who purchased on crypto asset trading platforms—including retail investors—and Ripple’s offers and sales of XRP for which Ripple received non-cash consideration were not offers and sales of investment contracts.”
The financial regulator also argued that Ripple’s activities fostered profit expectations among buyers, satisfying the criteria for an investment contract under the Howey Test.
Considering this, the financial regulator requested that the Appeals Court vacate the lower court’s erroneous ruling.
The SEC’s appeal follows its partial defeat in July 2023 when Judge Analisa Torres ruled that only XRP sales to institutional investors qualified as securities. Court ruled that sales of XRP to retail investors were not in violation of US federal securities law. The SEC appealed this decision.
Ripple received a $125 million fine in August of 2024. However, the SEC’s appeal has added further complexities to the ongoing legal battle.
Ripple’s response
Ripple’s Chief Legal Officer, Stuart Alderoty, has dismissed the SEC’s appeal as a repetition of arguments that have already failed in court.
Alderoty emphasized that Ripple remains resilient, viewing the SEC’s actions as an obstacle to broader regulatory clarity. He said that Ripple would respond informally to SEC brief, but continue to concentrate on growing within the changing regulatory environment.
Then he added:
“The SEC’s lawsuit is just noise. A new era of pro-innovation regulation is coming, and Ripple is thriving.”
Brad Garlinghouse, CEO of Ripple also shared this view.
“[The SEC’s brief is] one definition of insanity…. Doing the same thing over and over and expecting different results. Gensler’s SEC really took this to heart.”
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