Ripple Replies SEC With Cross-Appeal in the Long-Running Court Case

After obtaining a partial win over the US Securities and Exchange Commission in Judge Analisa Torres’ final verdict, Ripple Labs Inc. has filed a notice of cross-appeal to the US Appellate Court.

The SEC informed the Second District US Court of Appeals on October 3, 2024, that it intended to appeal Judge Torres’ ruling in the Ripple case. Due to modifications made by both parties to the agreed settlement, many analysts had predicted an appeal; nevertheless, the Commission has not yet disclosed the specifics of its appeal.

For context, on August 7, Judge Torres of the Southern District Court of New York delivered her final ruling about the remedies in the Ripple vs. SEC case. The SEC appeal resulted from Torres’ determination that $125 million, rather than the Commission’s proposed $2 billion, was a suitable punishment for Ripple.

Ripple Files Cross-Appeal

Ripple responded yesterday, October 10, by filing a cross-appeal with the US Appeal Court. Garlinghouse and Stuart Alderoty, two prominent Ripple executives, expressed optimism that the cross-appeal will trigger the sequence of actions that will ultimately ease the SEC’s tight grip on the crypto industry.

In a post on X (formerly Twitter), Garlinghouse criticized the SEC and its Chair, Gary Gensler, for their disregard for the law and their unwillingness to give US industry players clarity—as seen by their decision to appeal the ruling rather than “accept their loss and move on.”

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

The Ripple boss emphasized that the company hopes to “seal the SEC’s fate and finally put an end to the SEC’s regulation-by-enforcement agenda” via the cross-appeal.

Ripple Looks to End Genslers’ Attack Over the Industry

Alderoty, the chief legal officer of Ripple, spoke out strongly against the US securities regulator yesterday following the cross-appeal announcement.

Alderoty wrote, “Today, Ripple filed a cross-appeal to ensure nothing’s left on the table, including the argument that there can’t be an “investment contract” without there being essential rights and obligations found in a contract.”

The SEC has already declared, according to Alderoty, that “they aren’t appealing the ruling that XRP itself isn’t a security.” The legal executive stated that “an appeal on these other issues doesn’t change it” because the law was previously clear regarding XRP’s security status.

In the Binance case, the SEC inserted a footnote apologizing for “any confusion it may have invited by falsely and repeatedly stating that tokens themselves are securities.” He also noted this apology.

Alderoty added, “We look forward to the federal court of appeals finally putting a stake in the heart of Gensler’s misguided attack on our industry.”

The SEC’s legal battle with Ripple is just one of several instances where the agency has used enforcement regulations as a weapon against the crypto industry. Recently, the SEC sent a Wells notice to Crypto.com, another exchange, indicating that the company might face legal action.

Conclusion

Ripple Labs’ decision to file a cross-appeal following its partial victory against the U.S. SEC highlights its determination to push back against what it perceives as the SEC’s overreach in regulating the crypto industry. The cross-appeal, filed after the SEC announced its intention to challenge Judge Torres’ ruling, signals Ripple’s aim to not only defend its position but also to curb the SEC’s broader enforcement tactics.

Ripple executives, including CEO Brad Garlinghouse and Chief Legal Officer Stuart Alderoty, have been vocal in criticizing SEC Chair Gary Gensler for lacking regulatory clarity and adopting a heavy-handed approach to the crypto sector. This legal maneuver underscores Ripple’s desire to establish a clearer, more favorable legal precedent for the entire industry, potentially ending what it views as the SEC’s “regulation-by-enforcement” agenda.