In a surprising countermove, Ripple has filed a form C appeal against the US Securities Exchange Commission SEC. This filing follows a resolution by Ripple executives to “leave nothing on the table” during their defense.
An X post on October 25 by Ripple’s chief legal officer, Stuart Alderoty, confirmed the filing, throwing more light on the matter and calling out SEC's "broader strategy" of trying to "create distraction and confusion for Ripple and the industry."
Today, Ripple filed a Form C - listing the issues we plan to raise on our cross appeal. A few things to keep in mind as we move forward:
— Stuart Alderoty (@s_alderoty) October 25, 2024
The case is not about whether XRP, in and of itself, is a security. XRP is uniquely situated as having clarity (alongside BTC) in not being… https://t.co/AmFocAnbPx
For context, in August, the US District Court for the Southern District of New York imposed a $125 million fine on Ripple. The penalty fee followed institutional XRP sales allegations after a rule that the cross-border payment firm constituted securities transactions.
In addition, the above ruling stood because the SEC asserted that Ripple's institutional sales of XRP qualified as securities transactions under the Howey test (a legal standard used to determine whether certain transactions qualify as investment contracts).
Ripple Seeks Clarifications
The court, however, did distinguish between institutional and programmatic sales, stating that the latter did not constitute securities when sold on digital exchanges. Hence, Ripple's form C appeal now seeks to contest this ruling, highlighting four critical issues that it believes the court should consider:
- If an investment contract must be legally binding: While this may not absolve the company of the $125 million fine, Ripple argues that a clarification would benefit the broader crypto space.
- Whether the district court missed Howey's test during institutionalized sales evaluation appeared in the clarification requirements.
- It received the fair notice defense, implying that the company is arguing that it never knew its actions violated the law. By invoking this legal principle, Ripple attempted to shift the burden of proof back to the SEC.
- It challenges the validity of the injunction, highlighting the SEC’s alleged regulatory ambiguity. Consequently, Ripple argues that the SEC’s ambiguity with regulatory laws renders the injunction invalid.
By challenging these points, Ripple will not only strengthen its case. It would also undermine the SEC's claims. Meanwhile, Stuart Alderoty’s X post noted that "SEC can't submit new evidence," nor can it ask Ripple to "produce more." For now, the crypto community awaits the outcome of the appeal and its possible impact on the crypto space.
