Ripple Labs recently filed a Form C in the United States Court of Appeals for the Second Circuit, contesting a recent ruling by the U.S. Securities and Exchange Commission (SEC). Ripple’s Chief Legal Officer, Stuart Alderoty, confirmed the filing in a post on X (formerly Twitter) on Oct. 25, stating that the SEC cannot submit new evidence or ask Ripple to provide more information.
Ripple Pushes Back on $125 Million Fine
This filing follows a significant decision from the U.S. District Court for the Southern District of New York in August, which imposed a $125 million fine on Ripple for its institutional XRP sales, claiming these transactions were securities under U.S. law. Ripple’s appeal, however, argues that its XRP sales to accredited investors should not be classified as securities transactions.
Ripple’s legal team disputes the district court’s interpretation of the Howey test—a standard used to determine if a transaction is an investment contract. Ripple’s filing requests a de novo review, allowing the appeals court to reevaluate the district court’s legal conclusions without deferring to its previous findings.
SEC and Ripple’s Legal Standoff Continues
Ripple’s latest filing also comes after the SEC filed an appeal on Oct. 16, challenging parts of the district court’s previous judgement. The SEC is not contesting the decision that XRP is not a security when sold programmatically on digital asset exchanges. Instead, the SEC seeks a review of the court’s interpretation of securities law in institutional sales of XRP.
In July 2023, Judge Analisa Torres of the U.S. District Court for the Southern District of New York partially ruled in Ripple’s favour, determining that XRP isn’t a security in digital exchange sales. Ripple’s legal team remains optimistic, with Alderoty stating that the SEC’s tactics are merely “background noise” as they continue to pursue a clear path forward in court.
