Ripple Challenges Crypto Regulatory Uncertainty, Files Appeal Against SEC

Ripple Labs has filed a cross-appeal with the U.S. Court of Appeals for the Second Circuit, challenging several elements of a key ruling in its legal battle with the Securities and Exchange Commission.

This decision comes a week after the SEC submitted its own appeal, targeting specific aspects of a 2023 court ruling that partially favored Ripple in its sale of XRP to investors.

The appeal process, which is expected to continue into next year, has already attracted significant attention due to its potential impact on the regulation of digital assets in the United States.

“The Court of Appeals is looking at the record that has already been set and we have an excellent record,” Stuart Alderoty, Ripple’s chief legal officer, said in a statement Thursday on X.

“The SEC cannot submit new evidence or ask us to produce more. This means there won’t be all the drama we had in litigation when we were fighting over documents,” he said. -he added.

Ripple’s filing, dated Thursday, outlines 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 claims that the U.S. District Court for the Southern District of New York, under Judge Analisa Torres, misapplied the definition of an “investment contract” in connection with the Securities Act of 1933.

Specifically, the company disputes 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 claims the court overlooked broader regulatory uncertainty surrounding how securities laws apply to crypto.

The company claims that the SEC failed to provide fair notice that the sale of XRP would violate these laws, raising an important legal question about the application of securities regulations to digital assets.

The regulator, meanwhile, is appealing the dismissal of charges related to Ripple’s programmatic sales of XRP on digital exchanges and its distribution to employees, which it says violated those laws.

The regulator is focused on whether Ripple executives Brad Garlinghouse and Chris Larsen violated securities laws by offering what it considers unregistered sales.

Notably, the SEC did not challenge the district court’s finding that XRP itself is not a security, a decision that remains a significant victory for Ripple.