In summary
- Ripple Labs filed an appeal in the United States Court of Appeals for the Second Circuit, challenging several elements of a key decision in its legal battle with the SEC.
- Ripple’s appeal centers on the argument that its institutional sales of XRP should not have been classified as unregistered securities offerings.
- Ripple maintains that the Southern District Court of New York incorrectly applied the definition of an “investment contract” and overlooked regulatory uncertainty around cryptocurrencies.
Ripple Labs has filed an appeal in the United States Court of Appeals for the Second Circuit, challenging several elements of a key decision in its legal battle with the Securities and Exchange Commission (SEC).
The action comes a week after the SEC filed its own appeal, targeting specific aspects of a 2023 court decision that partially favored Ripple in its sale of XRP to investors.
The appeals process, which is expected to continue into next year, has already attracted significant attention due to its potential impact on digital asset regulation in the US.
“The Court of Appeal reviews the record that has already been established and we have a great record,” Stuart Alderoty, Ripple’s chief legal officer, said in a statement on X on Thursday.
“The SEC cannot present new evidence or ask us to produce more. In other words, there will not be all the drama that we had in the litigation when we argued over documents,” he added.
Ripple’s filing, dated Thursday, details four critical issues the company plans to address.
At the heart of the company’s appeal is the argument that its institutional sales of XRP should not have been classified as unregistered securities offerings, resulting in a $125 million fine.
Ripple contends that the Southern District Court of New York, under the jurisdiction of Judge Analisa Torres, incorrectly applied the definition of an “investment contract” in connection with the Securities Act of 1933.
Specifically, the company challenges the requirement that such a contract must impose post-sale obligations on the seller and give buyers the right to profit from the seller’s efforts.
Additionally, Ripple argues that the court overlooked greater regulatory uncertainty around how securities laws apply to cryptocurrencies.
The company claims that the SEC failed to provide fair notice that the sale of XRP would violate these laws, raising a significant legal question about the application of securities regulations to digital assets.
Meanwhile, the regulator is appealing the dismissal of charges related to Ripple’s programmatic sales of XRP on digital exchanges and its distributions to employees, which it claims violated those laws.
The regulator is focusing on whether Ripple executives Brad Garlinghouse and Chris Larsen violated securities laws by offering what it considers to be unregistered sales.
Notably, the SEC has not challenged the district court’s finding that XRP itself is not a security, a ruling that remains a significant victory for Ripple.
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