Back to crypto past: SEC didn’t appeal key XRP ruling, but that’s not the end of the story

October 21, 2024 at 7:34 pm

Edited by Anna Akopian

Follow-up

Ripple’s chief legal officer, Stuart Alderoty, confirmed that the U.S. Securities and Exchange Commission has not appealed the court’s ruling that XRP is not a security.

The lawyer’s comment was in response to the news that the SEC filed a Form C civil appeal. Ripple attorney James K. Filan confirmed that the SEC did indeed file documents with the Court of Appeals.

No surprises here — once again it’s been made clear. The Court’s ruling that “XRP is not a security” is NOT being appealed. That decision stands as the law of the land.

Stay tuned for Ripple’s Form C to be filed next week. https://t.co/m9molUGSBv
— Stuart Alderoty (@s_alderoty) October 18, 2024

Form C, (“Civil Appeal Pre-Argument Statement”) is a document in which the SEC states its intention to appeal certain legal decisions made in a case. In Ripple case, the SEC asked the court to review the application of the law in a previous summary judgment. This means that the judge will analyze the legal aspects of the case, not just the final decision.

In the claim, the regulator asked to reconsider the court’s decision to sell Ripple (XRP) token on exchanges, as well as personal sales of the token by Ripple CEO Brad Garlinghouse and co-founder Chris Larsen.

Ripple is set to file its own cross-appeal to challenge the ruling on institutional sales, and both sides are bracing for a lengthy process that could change how digital assets are classified and regulated in the future. Alderoty urged to watch Ripple’s Form C filing this week.

How did XRP react?

Amid the latest news on the case, the price of XRP remains relatively stable. The asset’s price has increased by 1.74% over the past week. At the time of writing, XRP is trading at $0.5468.

Back to crypto past: SEC didn't appeal key XRP ruling, but that's not the end of the story - 1 — Source: crypto.news

The token was a detriment to the overall crypto market growth, which increased by 0.59%, reaching a capitalization of $2.36 trillion in 24 hours.

SEC and Ripple disputes will continue until next year

According to Alderoty, the case could drag on until July 2025. In a conversation with Fox Business correspondent Eleanor Terrett, he noted that the crypto project will also file a Form C application, in which it will outline arguments for a counter-appeal.

The SEC will have 90 days to file an opening brief. Alderoty expects the regulator to use this time to prepare the most comprehensive presentation of its arguments.

“Both parties will then agree on a briefing schedule and the SEC then has up to 90 days to file its first brief. Alderoty says he expects them to take the full 90 days. That opening brief will be a full recitation of all the legal arguments that the SEC will be making. Ripple will file a response and then its own brief. The full briefing process, according to Alderoty, will go through July 2025.”
Eleanor Terrett, Fox Business correspondent

Ripple will not conduct IPO because of SEC

Garlinghouse previously commented on the company’s possibility of entering the stock market, drawing attention to the position of the SEC and the financial stability of Ripple. When asked about a potential IPO after the expected clarification of regulatory standards, Ripple CEO said that this is not the main goal for the company.

“An IPO has not been a high priority for us and part of that is because the SEC is not our friend. I’m not really popular there. They don’t have pictures of me in the halls of the SEC unless they have dart boards on them.”
Brad Garlinghouse, Ripple CEO

Garlinghouse also shared his hopes for the future of the crypto market until 2025. Despite the current difficulties in the industry, he expressed optimism, noting the changes in the positions of the U.S. government and increased interest from major players such as BlackRock. This indicates growing interest from institutional investors in blockchain technologies and their capabilities.

He added that an improvement in the regulatory environment is important for entering the stock exchange, but Ripple has a strong financial foundation, which allows the company to continue its projects even without an IPO.

Back to the beginning: How the SEC and Ripple saga began

In December 2020, the SEC filed a lawsuit against Ripple Labs Inc. and its co-founders, Christian Larson and Jed McCaleb. The lawsuit was based on the accusation that they conducted unwarranted sales of an unspecified number of XRP tokens, which the SEC considered to be unregistered securities.

The SEC alleged that Ripple issued billions of XRP tokens and sold them for more than $1.3 billion without the appropriate registration collateral. According to the SEC, the XRP token should have been registered as a security. The SEC also emphasized that XRP creates an expectation of profit for investors, which meets the criteria for classification as a security.

Ripple, in turn, argued that XRP should not be considered a security but a digital currency similar to Bitcoin (BTC) and Ethereum (ETH), which the SEC does not classify as securities. Thus, the company insisted that its actions comply with applicable law.

In July 2023, the court recognized that selling XRP to private investors cannot be equated to securities transactions. Still, the issue of large players purchasing tokens under a preliminary agreement remains open.