The SEC appeals against the ruling on Ripple

In August, the lawsuit between the SEC and Ripple came to an end. 

Although the company was fined 125 million dollars, many have interpreted that ruling as a de facto victory for Ripple against the SEC.

Now, instead, it turns out that the SEC yesterday filed an appeal against that ruling.

SEC vs. Ripple: the endless lawsuit

The main reason why the SEC filed a lawsuit against Ripple four years ago is that the agency overseeing the U.S. securities market claims that Ripple initially sold XRP as an unregistered security, and this is illegal in the USA. 

In fact, the United States law, like those of many other countries, stipulates that it is possible to offer security to the public only after registration and approval with the appropriate agencies. 

In the USA, it is the SEC (Securities and Exchange Commission) the agency where it is necessary to register the security before offering them to the public, and Ripple has never requested the registration. 

In a previous case, a judge had already ruled that XRP, when traded on the secondary market (the exchanges), could not in any way be considered an investment contract (i.e., a security), and the SEC then decided not to appeal against that ruling. 

Instead, in the case in question, the issue concerns the sale of XRP on the primary market, that is, from its creator (the company Ripple) to the initial investors. 

In August, to tell the truth, Ripple had not been completely cleared of the accusations, but it had managed to reach an agreement with the judge and the SEC to get away with a fine.

The appeal of the SEC

However, the agency at a later time evidently decided not to settle for that agreement. 

And so yesterday he filed an appeal against that sentence. 

In the document presented yesterday to the Court of Appeals for the Second Circuit, it is stated only that the Securities and Exchange Commission respectfully appeals against the final judgment issued on August 7, 2024. 

Subsequently, a spokesperson for the SEC merely stated that the agency believes that the district court’s decision in the Ripple matter is in conflict with the securities law, and with decades of Supreme Court precedents. 

So it actually argues that the court made a mistake in applying the law, and that this would be demonstrated by many similar precedents from past decades. 

Note that the SEC had requested the judge to impose a penalty of 2 billion dollars on Ripple, while thanks to the agreement with the judge, the penalty imposed was 125 million. 

It almost seems that the SEC wants nothing more than to start the process from scratch because fundamentally it does not appreciate the judge’s ruling. 

It should still be remembered that the USA is in the midst of an election campaign for the presidential elections on November 5th, and that the president of the SEC Gary Gensler could play a key role at a propaganda level to seek the consensus of the detractors of cryptocurrencies. 

Ripple’s response to the SEC’s appeal

The first instance judgment of August, until proven otherwise, is final. 

It was the SEC’s right to appeal in court, and unlike last year in the case against XRP, this time it decided to appeal. 

However, it is difficult to imagine that in the absence of significant developments, the outcome of the process could be substantially different from the current one. 

The CEO of Ripple, Brad Garlinghouse, yesterday posted on X his response to the SEC’s decision to appeal. 

He says that if Gensler and the SEC were rational, they would have already dropped this case a long time ago, and he states that their attitude has not protected investors and has damaged the credibility and reputation of the agency itself.

According to Garlinghouse the SEC simply does not want to admit that it has lost on everything that matters, in the case against Ripple, and that the bull industry and the state of law have actually already prevailed.

Furthermore, it reiterates that the status of XRP as a non-security in the secondary market will not change. 

According to Ripple’s Chief Legal Officer, Stuart Alderoty, the SEC’s decision to file an appeal is indeed disappointing, but not surprising. 

Adds: 

“This does nothing but prolong what is already a total embarrassment for the agency”.

In fact, it highlights that the same Second Circuit Court has already rejected the SEC’s hypothesis that Ripple acted recklessly. According to Alderoty, Gensler’s SEC is not merely faithfully enforcing the law, but is engaging in a true war against the crypto sector with lawsuits in court. 

Conclude by writing: 

“Coincidence that the executive director of the SEC announced his resignation about an hour earlier?”