The United States Securities and Exchange Commission took the next step in appealing Judge Analisa Torres’ previous ruling in the protracted legal dispute with Ripple.
On late Thursday, the formidable regulator filed a Civil Appeal Pre-Argument Statement — also known as Form C — against certain aspects of Torres’ summary judgment in favor of Ripple. However, the legal status of the controversial XRP cryptocurrency will not be targeted as part of the regulator’s appeal.
Ripple Executives Targeted In SEC Appeal
Many XRP fans were worried that the Securities and Exchange Commission might challenge XRP’s securities status in its Form C. Much to their delight, this is not the case, which gives XRP a significant advantage as the appeals process unfolds.
Judge Analisa Torres’ July 2023 historic ruling partially favored Ripple by finding that the fintech firm’s sales of XRP to retail investors on exchanges did not break federal securities laws. The court concluded that these transactions did not satisfy the legal criteria for an investment contract, dealing a huge blow to the SEC’s wider efforts to regulate crypto sales under existing securities laws.
The SEC’s filing in the U.S. Court of Appeals for the Second Circuit late Thursday does not contest the decision that XRP sales to retail investors via exchanges are not securities. Instead, the Commission is focusing on other critical aspects of the ruling.
The appeal targets the court’s decision that Ripple’s offers and sales of XRP on digital asset trading platforms, as well as personal sales by Ripple CEO Bradley Garlinghouse and Executive Chairman Chris Larsen, did not constitute securities violations.
“Whether the district court erroneously granted partial summary judgment in favor of defendants with respect to Ripple’s offers and sales of XRP on digital asset trading platforms (and Garlinghouse’s and Larsen’s aiding and abetting of those offers and sales), Garlinghouse’s and Larsen’s personal offers and sales of XRP, Ripple’s distributions of XRP in exchange for consideration other than cash,” the Form C reads.
“These issues are to be reviewed de novo,” the SEC stated in the appeal. This means that the appellate court will reconsider the presented legal issues from scratch without regard to the district court’s interpretations.
SEC Isn’t Contesting XRP’s Non-Security Status
Ripple’s chief legal head, Stuart Alderoty commented on the SEC’s appeal in a post on X, stressing that the agency isn’t appealing the ruling that XRP is not a security. “That decision stands as the law of the land,” Alderoty stated, adding that Ripple is preparing to file its own Form C in the coming week without an exact date.
This past August, Judge Torres imposed her final judgment enjoining Ripple from further violations of Section 5 of the Securities Act of 1933 and ordered the company to pay a $125 million fine.
The appeals process is predicted to entail a three-judge panel, with a final judgment likely to come after at least a year. As of now, the focus remains on the SEC’s argument that the court’s ruling on XRP sales could set a troubling legal precedent for future cases.
At press time, the price of XRP has flattened out at $0.549, down 1.28% on the day. However, the coin has still been up a paltry 1.9% over the last seven days.
This articles is written by : Nermeen Nabil Khear Abdelmalak
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