Ripple Labs, the company behind the XRP digital asset, has officially filed a cross-appeal in its ongoing legal struggle with the U.S. Securities and Exchange Commission (SEC). The cross-appeal, filed with the U.S. Court of Appeals for the Second Circuit, concerns certain parts of the decision made in August 2023.
This comes in the wake of the SEC’s own appeal which was filed earlier this month. Ripple’s cross-appeal is a move to counter what it has described as the SEC’s regulation by enforcement.
Ripple CEO Vows to End SEC’s Approach
Ripple CEO, Brad Garlinghouse stated that the Company is ready to withstand the legal procedures that are currently going on. In an X post, he blasted the US SEC and accused them of introducing uncertainty instead of providing regulatory direction.
Garlinghouse also emphasized that Ripple plans to set the precedent in stopping what the company sees as SEC’s aggressive regulatory actions. He said that the cross-appeal would put the final nail in the SEC’s coffin. It would help in the solution of the ongoing dispute, he said.
Ripple’s Cross-Appeal Explained
The appealed decision was made in August when a federal judge ordered Ripple to pay a $125M civil penalty. This fine was for securities law violations. This was in relation to the sales of its XRP token to institutions that the SEC said were unregistered securities.
Nevertheless, the court decided that XRP sales on the secondary market were not securities which partially benefitted Ripple. The fine was also much less than what the SEC had initially sought, which was $2 billion.
Ripple’s cross-appeal seeks to ensure clarity on every issue as the court process goes on. Stuart Alderoty, Chief Legal Officer, pointed out that the company is actually disputing the SEC’s claim to ‘investment contracts.’ He said,
“Ripple filed a cross-appeal to make sure that all angles are covered, including the aspect of essential rights and obligations of a contract.”
Alderoty also pointed out that the SEC’s appeal lacks a strong legal foundation. He was confident Ripple would win the case.
SEC Seeks to Challenge Previous Rulings
The SEC’s appeal filed on October 2, contests the court’s previous decision that sales of XRP to retail investors were not in violation of securities laws. The SEC had earlier alleged that Ripple sold $1.3 billion of XRP in an unregistered securities sale.
Accordingly, Judge Analisa Torres decided in July 2023 that Ripple’s institutional XRP sales were in violation of the securities laws while programmatic sales and employee distributions were not. The SEC has said that it will appeal this decision on the grounds that it conflicts with earlier Supreme Court decisions.
Ripple has come out to reject the SEC’s claims stating that the original decision of the court should be maintained. Alderoty said, “The SEC lost on all key points—that’s why they appealed,” and he expects the regulator to lose again in court.
