Ripple CLO: SEC Lost on All Key Points

As a seasoned analyst with over two decades of experience in the financial markets, I have seen my fair share of legal battles between regulatory bodies and innovative companies. The ongoing saga between Ripple and the SEC is one that has caught my attention for quite some time now.


Yesterday, Ripple made an intriguing move by filing a cross-appeal against Judge Torres’s final decision in the SEC lawsuit, a verdict that was handed down on August 7, 2024.

On October 10, 2024, Brad Garlinghouse, CEO of Ripple, and Chris Larsen, its Chairman, were listed as defendants in a cross-appeal notice that was submitted to the United States Court of Appeals for the Second Circuit.

In early October, Ripple was ordered by the SEC to pay a $125 million fine as part of a civil penalty for its XRP sales. However, this amount falls significantly short of the $2 billion that the regulatory body had initially demanded.

The recent cross-appeal by Ripple against the SEC has garnered interest within the cryptocurrency sector. In a recent tweet, Ripple’s CEO Brad Garlinghouse expressed his anticipation for the outcome of their cross-appeal: “Today, we filed our cross-appeal aiming to set the SEC’s course and ultimately bring an end to the SEC’s strategy of regulation through enforcement. As a pioneer in court during the first round, we are eager to lead the charge once more.

SEC lost on all key points

In a recent post, Ripple’s Chief Legal Officer, Stuart Alderoty, pointed out the SEC’s decision to appeal, explaining that “Since the SEC lost on all crucial aspects of the case, they are choosing to appeal.

Initially, the SEC lost all crucial arguments, leading them to file an appeal. Today, Ripple has submitted a counter-appeal to exhaustively cover every aspect, such as maintaining the point that for something to be considered an “investment contract,” it must include fundamental rights and duties similar to those found in a regular contract.

— Stuart Alderoty (@s_alderoty) October 10, 2024

As a crypto investor, I understand that Ripple has filed a cross-appeal to leave no stone unturned, particularly focusing on the point that for something to be considered an ‘investment contract,’ it must possess fundamental rights and responsibilities similar to those within a traditional contract.

The Ripple Chief Legal Officer (CLO) emphasized that the Securities and Exchange Commission (SEC) had earlier declared that they would not challenge the decision classifying XRP as a non-security, and even expressed regret in another instance for suggesting a token could be considered a security on its own. Alderoty further stated, “Regardless of any other appeals, this ruling stands.

Previously, the Securities and Exchange Commission made an effort to submit a premature appeal regarding the rulings that classified Ripple’s XRP transactions, such as sales on exchanges and distribution to employees and developers, as non-securities. However, this attempt was unsuccessful.

Alderoty stated that it’s quite possible they’ll attempt this action again, and they’ll fail on both occasions. Furthermore, he mentioned that the company eagerly anticipates the Federal Court of Appeals eventually dealing a fatal blow to SEC Chair Gary Gensler’s unwise assault on the cryptocurrency sector.

Read More

2024-10-11 14:06