After much confusion and speculation, the Securities and Exchange Commission (SEC) has filed an appeal in its ongoing legal spat with Ripple Labs.
The appeal is challenging parts of Judge Analisa Torres’ 2023 summary judgment, which found that Ripple’s sales of its XRP token to retail investors on crypto exchanges did not break U.S. securities laws.
Ripple Executives Targeted in SEC Appeal
While many observers had anticipated the SEC to dispute the court’s verdict that programmatic sales of XRP did not meet the legal criteria for an investment contract, the agency chose to focus on other crucial facets of Judge Torres’ ruling.
One area the appeal is targeting is the court’s determination that Ripple’s offerings and sales of XRP on crypto platforms, as well as personal trades by the company’s executives, including Brad Garlinghouse and Chris Larsen, did not breach securities laws.
The regulator is also opposing the decision that found no violation of securities laws occurred when the crypto payments company distributed XRP in exchange for non-cash considerations.
In the same judgment, Ripple’s institutional sales of XRP were deemed to have been against securities laws. The company was forced to pay a $125 million fine for that violation.
The SEC had submitted a notice of appeal on October 2 and, by law, had a 14-day window to file Forms C and D. The forms were expected to provide more information on exactly what parts of Judge Torres’ ruling the agency would be contesting.
Late Filing Sparks Controversy
When the expected deadline came and went, seemingly without any action from the regulator, it sparked widespread speculation within the community, with many wondering whether it had deliberately jeopardized its long-running case against the crypto company.
Some experts had suggested that failure to file the requisite documents on time could result in the appeal being dismissed out of hand, possibly ending the SEC’s quest to overturn Judge Torres’ findings.
The apparent omission was even more surprising given the agency’s reputation for punctuality and the massive interest in the Ripple case.
Adding to the intrigue, when it was finally deposited, the SEC’s Form C was dated October 16, while the court’s file stamp on the document read October 17, further fanning speculation that the agency may have missed its deadline. However, Fox journalist Eleanor Terrett suggested that the notice of appeal may have been filed on October 2 but only appeared on the docket on October 4, meaning the actual deadline was October 18 at 11.59 PM.
Whatever the case, legal experts like MetaLawMan say the 2nd Circuit Court of Appeal now has to decide whether the SEC’s filing was made within the allocated time.
On its part, Ripple has seven days to respond to the filing, with its Chief Legal Officer Stuart Alderoty saying the company will do so next week.
