- Ripple appeal challenges the district court’s ruling on XRP, seeking a “de novo” review for independent evaluation.
- Ripple argues that XRP sales do not meet the legal definition of an “investment contract” under the 1933 Securities Act.
Ripple has officially filed an appeal against a US District Court decision classifying its institutional XRP sales as securities transactions. Detailed in Ripple’s Form C, the appeal asks for a “de novo” review, therefore enabling the appellate court to consider the legal interpretations of the district court free from reference to past rulings.
Particularly with regard to the Securities Act of 1933’s designation of XRP as an investment contract, Ripple’s legal team contends that the decision misconstrued fundamental aspects of securities law.
Ripple Challenges Securities Classification, Citing Misinterpretation of Investment Contract
The Southern District of New York’s decision declaring Ripple’s XRP sales as securities transactions shapes their appeal. Ripple claims that this interpretation is not only faulty but also could have general effects on the domain of digital assets.
The company feels that the ruling of the district court does not reflect the actual character of XRP transactions. Lawyer James K verified the submission in a recent X post, stressing Ripple’s continuous attempts to challenge the decision.
#XRPCommunity #SECGov v. #Ripple #XRP @Ripple has filed the Civil Appeal Pre-Argument Statement (Form C). The relevant pages are below. pic.twitter.com/usm3fCjG20
— James K. Filan (@FilanLaw) October 25, 2024
Under the Securities Act of 1933, Ripple’s legal case revolves mostly on the meaning of an “investment contract.” Along with the buyer’s right to get earnings straight from Ripple, a legitimate investment contract should include a legal agreement with particular post-sale obligations, according to Ripple.
The company maintains that its XRP sales fall short of these requirements and so shouldn’t be categorized as securities transactions.
“Ripple’s posture is clear: XRP does not constitute an investment contract under the law,” former securities attorney Marc Fagel remarked. Fagel also said that this case might establish a significant legal precedent for the treatment of digital assets under American law.
Challenging the Application of the Howey Test and Regulatory Uncertainty
Ripple further objects to the district court’s application of the “Howey Test,” a criteria created in the 1946 SEC v. W.J. Howey Co. case that ascertains whether an asset qualifies as a security.
The company argues that its XRP sales fall short of the criteria of the test, especially the need of a “common enterprise” in which earnings are expected just from the activities of the promoter or a third party. Ripple contends that its transactions do not entail this kind of arrangement, hence the court’s application of the Howey Test was unsuitable.
Apart from contesting the way securities legislation is interpreted, Ripple questions the lack of regulatory certainty the U.S. Securities and Exchange Commission (SEC) offers.
Ripple says it made significant disclosures on the regulatory uncertainty around XRP but that the SEC has not provided clear direction on how digital assets, including XRP, need to be controlled. Ripple’s case revolves mostly around this “fair notice” problem since the business feels it was not given enough warning of the legal norms it was allegedly violating.
“Regulatory uncertainty has been a major hurdle for the crypto industry, and ripple’s case exemplifies this issue,” a spokesman for the company stated. “The SEC has not given clear direction, which has confused businesses like ours functioning in the digital asset space.”
Ripple also questions Judge Analisa Torres’ injunction, which generally commands the business to “obey the law.” Under the Federal Rules of Civil Procedure, Ripple contends, this injunction lacks the required legal precision. The organization feels that such nebulous instructions are inadequate and should be changed for more clarity.
For Ripple, this legal fight comes at a pivotal point as the business keeps looking for regulatory clarification for the whole bitcoin sector in addition to its own activities.
According to our prior reports, Ripple officials had 14 days to provide the required acknowledgements and appearances of appearance in the complaint against the SEC. Former securities attorney Marc Fagel claimed that there is no proof supporting assertions made by the SEC on delayed Form C filing.
More broadly, Ripple’s situation might have far-reaching effects on digital assets in the United States and blockchain technology’s direction. Political changes could help Ripple and other digital asset companies, according to some analysts—including members of the crypto community.
According to CNF, a Trump presidency would bring beneficial legislative changes for cryptocurrencies like XRP, therefore establishing the U.S. as a leader in blockchain innovation.
