SEC Appeals Court Decision Favoring Ripple in XRP Case

The United States Securities and Exchange Commission (SEC) has filed its opening brief to challenge a court decision that favored Ripple in the ongoing XRP case.

On January 15, the SEC argued that Ripple’s sales of XRP to retail buyers should be classified as unregistered securities transactions. The SEC claimed that these sales created profit expectations among buyers, meeting the criteria for an investment contract under the Howey Test.

The SEC stated in its filing:

“The district court erred both factually and legally in concluding that defendants’ offers and sales of XRP to public buyers who purchased on crypto asset trading platforms—including retail investors—and Ripple’s offers and sales of XRP for which Ripple received non-cash consideration were not offers and sales of investment contracts.”

This appeal comes after a partial defeat for the SEC in July 2023, when a judge ruled that only XRP sales to institutional investors qualified as securities. The SEC now seeks to reverse this decision, arguing that sales to retail investors should also be considered securities.

The legal battle between Ripple and the SEC began in December 2020 and culminated in August 2024 with Ripple being fined $125 million. However, the SEC’s appeal has added further complexity to the case.

Ripple’s Response

Ripple’s Chief Legal Officer, Stuart Alderoty, dismissed the SEC’s appeal as a repetition of failed arguments. Alderoty emphasized that Ripple remains focused on growth despite regulatory challenges and will respond formally to the brief.

Alderoty stated:

“The SEC’s lawsuit is just noise. A new era of pro-innovation regulation is coming, and Ripple is thriving.”

Ripple CEO Brad Garlinghouse also criticized the SEC’s actions, calling the appeal “one definition of insanity.” He expressed confidence in Ripple’s ability to navigate the regulatory landscape and continue its growth.

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