The Securities and Exchange Commission (SEC) has announced its decision to appeal a federal court ruling in its prolonged legal battle against Ripple Labs and XRP.
The SEC’s notice of appeal, filed with the Second Circuit Court of Appeals on Oct. 2, follows a key August ruling that dealt a mixed outcome in the regulator’s high-profile case against Ripple.
Ripple CEO Brad Garlinghouse and CLO Stuart Alderoty expressed disappointment with the regulator’s decision to appeal and reaffirmed their intent to fight the case in court.
SEC appeal
The SEC, which sued Ripple in December 2020 over allegations that the company conducted a $1.3 billion unregistered securities offering through XRP sales, contends that the district court’s decision conflicts with longstanding Supreme Court precedent.
Ripple had initially celebrated parts of the ruling as a victory for the crypto industry. US District Judge Analisa Torres ruled that programmatic sales of XRP to retail investors via crypto exchanges did not violate securities laws.
However, the judge also found that Ripple’s direct sales of XRP to institutional investors — worth $728 million — did constitute unregistered securities sales, resulting in a $125 million penalty for the company.
The SEC had originally sought a significantly higher $2 billion fine, but the lower-than-expected penalty was seen as a win for Ripple. Nevertheless, the case’s unresolved status now returns to the forefront with the SEC’s appeal.
The news of the SEC’s move sent XRP tumbling further in value, dropping around 9% over the past day to trade just above $0.54 as of press time, based on CryptoSlate data.
Ripple execs slam SEC
Garlinghouse said he was “frustrated” with the agency’s continued legal battle, accusing it of wasting taxpayer money on a case that has already been decided in Ripple’s favor on key issues. He argued that the SEC had “lost on everything that matters” under Chair Gary Gensler and reiterated that XRP’s status as a non-security remains the law, regardless of the agency’s appeal.
Garlinghouse further criticized the SEC for its lack of accountability, noting that the agency faces no consequences for continuing what he considers a losing battle. He emphasized that Ripple, the crypto industry, and the rule of law have already prevailed, and this appeal would not change that outcome
Meanwhile, Alderoty echoed the sentiment and reiterated that the court determined there were no “victims or losses” in the case. He stated:
“Instead of faithfully applying the law, this agency, under this Chair, continues to engage in litigation warfare against the industry. We are evaluating whether to file a cross appeal.”
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