The U.S. Securities and Exchange Commission (SEC) has taken further steps in its appeal against a previous ruling in its ongoing legal battle with Ripple Labs. Late Thursday, the SEC filed a “Civil Appeal Pre-Argument Statement” (Form C), seeking to challenge the U.S. District Court for the Southern District of New York’s judgement. The agency aims to determine whether the court erred, particularly regarding Ripple CEO Brad Garlinghouse and co-founder Chris Larsen. The SEC has requested a “de novo” review, meaning the court will reassess how the law was applied in the case.
The SEC is specifically questioning whether the court wrongly granted partial summary judgement in favour of Ripple concerning its XRP sales on digital asset platforms, Garlinghouse’s and Larsen’s roles in aiding those sales, and Ripple’s distributions of XRP in exchange for non-cash assets.
Ripple’s Chief Legal Officer Stuart Alderoty responded on social media, asserting that the court’s decision that “XRP is not a security” remains intact and is not being appealed. He also mentioned that Ripple would file its Form C the following week.
The SEC initially appealed on October 2, citing a conflict between the district court’s decision and decades of Supreme Court precedent regarding securities laws. Ripple has since cross-appealed to ensure that the issue of “investment contracts” and their necessary contractual rights and obligations is thoroughly addressed.
The legal dispute dates back to 2020, when the SEC accused Ripple of raising $1.3 billion through the unregistered sale of XRP, which it claimed was a security. Judge Analisa Torres previously ruled that some of Ripple’s sales, referred to as programmatic, did not violate securities laws, while other direct sales to institutional investors were deemed securities. Ripple was ordered to pay $125 million in fines. The SEC’s earlier attempt to file an interlocutory appeal during the case was rejected, as it was not shown to expedite the resolution of the litigation.
