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- The SEC is appealing a court ruling that XRP sales on public exchanges are not securities.
- Judge Torres ruled Ripple’s institutional XRP sales violated securities laws, but retail sales did not.
- Ripple faces a $125 million fine for institutional sales, but retail sales worth $757 million are exempt.
The SEC has filed an official appeal of the federal court’s ruling in the ongoing legal dispute with Ripple Labs. In July 2023, U.S. District Judge Analisa Torres dismissed the claim that Ripple’s offering of XRP coins on multiple exchanges was illegal because it breached securities laws.
The U.S. SEC is appealing the U.S. Second Circuit Court of Appeals' previous ruling on Ripple, arguing that the district court's ruling in the Ripple case conflicts with decades of Supreme Court precedent and securities laws. Previously, the judge ordered Ripple to pay a $125…
— Wu Blockchain (@WuBlockchain) October 3, 2024
However, the SEC disagrees and is attempting to overturn the verdict through the second US Circuit Court of Appeals.
Judge Torres’ Dual Ruling on SEC Case
Judge Torres differentiated between Ripple’s sales of XRP to institutions and to individual retail customers in her decision. Even though she found that the company’s institutional sales of $728 million worth of XRP broke securities laws, she concluded that its retail sales on public exchanges were not in violation.
This victory was crucial for Ripple because the SEC did not have control over almost $757 million in sales to retail investors. Additionally, Ripple was fined $125 million by the court for its institutional sales, but the enforcement of the fine will be delayed until after the appeal is settled.
SEC’s Objection to the Ruling
The SEC promptly expressed its disapproval of the court’s decision, stating that it contradicts established Supreme Court rulings. The agency is challenging the ruling to reclaim control over XRP and, consequently, other digital currencies traded on public platforms.
Furthermore, the SEC feels that the decision weakens its capacity to oversee non-traditional financial products. A spokesperson for the SEC stated that the court’s ruling undermines laws meant to protect investors.
Ripple’s Reaction to the Appeal
Ripple has responded promptly to the appeal. CEO Brad Garlinghouse has described the SEC’s choice to appeal as disappointing and wrong in an X post. He reiterated that the court had sided with Ripple on significant issues and stated his belief that the appeal would not alter the result. Ripple’s legal team is confident that the previous ruling will stand, despite anticipating the appeal.
Implications for the Cryptocurrency Industry
The ongoing battle between Ripple and the SEC is a turning point for the cryptocurrency industry. The final ruling could impact how digital assets are managed in the United States. A verdict in this case will have an impact beyond Ripple. The outcome might shape the future of the digital currency sector, establishing laws that will affect many other crypto firms.