Ripple Files Cross-Appeal Challenging Final Judgment in SEC Lawsuit
Ripple has finally filed a cross-appeal requesting a review of the final judgment recorded on August 7.
The San Francisco-based blockchain payment company wants to challenge Judge Torres’ ruling that XRP institutional sales constitute investment contracts.
Ripple’s defense attorney, James K. Filan, shared this update in an X post. Ripple’s cross-appeal comes just a week after the Securities and Exchange Commission (SEC) filed its notice of appeal.
#XRPCommunity #SECGov v. #Ripple #XRP BREAKING: @Ripple has filed a cross-appeal of Judge Torres’s Judgment entered on August 7, 2024. pic.twitter.com/WieaeDQjcN
— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) October 10, 2024
Ripple Cross-Appeal Vs. SEC Appeal
Judge Torres’ summary and final judgment gave Ripple and the SEC partial victories. The court order states that Ripple’s institutional XRP sales violate securities laws. On the other hand, XRP programmatic sales and distributions in the secondary market are not investment contracts.
The judge imposed a penalty of $125 million on Ripple for securities law violation. Ripple also received an injunction mandating that it seek permission from the SEC before conducting future institutional sales to avoid securities law violations.
Meanwhile, the SEC did not accept the court’s decision regarding XRP programmatic and secondary market distributions. Thus, it has filed its notice of appeal to the court, requesting a review at the Court of Appeals.
A spokesperson for the SEC said: “We believe that the district court decision in the Ripple matter conflicts with decades of Supreme Court precedent and securities laws and look forward to making our case to the Second Circuit.”
Some legal experts suggested that Ripple file a cross-appeal, challenging the ruling on institutional sales of XRP.
#xrpcommunity
👇😎
XRP and Oranges 🍊🍊@MetaLawMan breaks down why XRP is not an investment contract with Ripple via @CryptoLawUS Kristi Warner. pic.twitter.com/Ign1S0Y85z— James Rule XRP 👊😎 (@RuleXRP) October 8, 2024
According to Attorney Filan’s X post, Ripple filed its cross-appeal notice on October 10 at the US District Court for the Southern District of New York. With its recent move, Ripple seeks to overturn Judge Torres’ order that its sales of XRP to institutional clients constitute investment contracts.
What to Expect from the Ripple Appeal Case
Although the company has not filed a cross-appeal brief, its chief legal officer, Stuart Alderoty, has already hinted at what to expect in the case.
According to Alderoty, the SEC appealed the final judgment because it lost in the core aspects of the matter. He noted that Ripple’s cross-appeal aims to ensure nothing is left on the table, meaning it wants to overturn every aspect of the ruling.
Ripple’s cross-appeal is based on the premise that no investment contract exists without a contractual agreement detailing the rights and obligations of the parties involved.
In addition, the Ripple CLO hinted at the possible premise of the SEC’s appeal brief. According to Alderoty, the SEC had confirmed it would not appeal the court’s ruling that XRP is not a security.
The legal expert cited another case where the SEC amended its complaint, apologizing for suggesting that a digital token could be a security. Alderoty believes that this move from the SEC cements its position regarding the status of crypto assets as securities.
It remains uncertain whether the SEC will challenge XRP’s status as a non-security. However, Alderoty believes it might contest the programmatic sales of XRP and distribution to developers and employees.
It’s worth noting that Judge Torres denied the SEC’s motion for interlocutory appeal on the programmatic sales ruling last October.
Ripple CEO Brad Garlinghouse reacted to the recent development, criticizing the SEC and Gary Gensler for adopting a regulation-by-enforcement agenda instead of providing clarity.
As I said earlier this month, if Gensler and the SEC cared about the rule of law, they would accept their loss and move on. But they are not interested in faithfully applying the law or in providing clarity to industry players in the US. Under Chair Gensler, the agency is only… https://t.co/hFlkXw83s8
— Brad Garlinghouse (@bgarlinghouse) October 10, 2024
Garlinghouse said the SEC should not have appealed the judgment because it cared about the cryptocurrency industry.
