Thomas Daniels
Ripple Labs has officially announced its intention to file a cross-appeal in its high-profile legal case against the U.S. Securities and Exchange Commission (SEC). This counter-move comes as the SEC proceeds with its own appeal against the July 2023 ruling, which determined that Ripple’s cryptocurrency, XRP, cannot be classified as a security when sold on public exchanges.
The SEC’s appeal, filed on October 2, seeks to overturn the earlier court decision that favored Ripple. The case stems from the SEC’s December 2020 lawsuit, which accused Ripple of selling XRP as an unregistered security, raising over $1.3 billion in capital through unlawful means. Ripple has consistently argued that XRP does not meet the criteria of a security, basing its defense on the “Howey Test,” the standard used to determine whether an asset qualifies as a security under U.S. law.
Ripple’s cross-appeal is a strategic step designed to preserve its legal standing and address all facets of the ongoing litigation. CEO Brad Garlinghouse expressed confidence on social media, stating that Ripple looks forward to concluding the case and ending the SEC’s “regulation-by-enforcement agenda.”
Stuart Alderoty, Ripple’s Chief Legal Officer, emphasized that the company is committed to maintaining all legal options as the case proceeds through the courts.
The Legal Process Intensifies
Both Ripple and the SEC are expected to submit detailed legal briefs outlining their positions in the coming weeks. Ripple’s cross-appeal allows the firm to defend key victories, including Judge Analisa Torres’ landmark ruling in July 2023, which concluded that XRP sales on secondary markets do not violate federal securities laws. However, the court also ruled that XRP sales to institutional investors were in breach of securities regulations, leading to a $125 million fine for Ripple.
Despite this partial setback, Ripple’s case has become a pivotal moment in shaping the regulatory landscape for cryptocurrencies. The court’s rulings have created a precedent, influencing how digital assets are classified under U.S. law.
Broader Implications for the Crypto Industry
Ripple’s legal milestones extend beyond its individual case. Earlier rulings, such as a 2021 decision by Judge Sarah Netburn, acknowledged XRP’s utility and currency-like value, distinguishing it from assets like Bitcoin and Ethereum. The case also prompted the release of internal SEC communications, including statements from former SEC Director William Hinman, whose comments on Ethereum’s status as a non-security significantly impacted Ripple’s defense.
As the battle between Ripple and the SEC progresses, the outcome could have far-reaching effects on the future of cryptocurrency regulation in the U.S., influencing how digital tokens are treated under securities law.
