With the SEC filing an appeal to contest Judge Torres’ decision about XRP’s classification, the prolonged legal battle between Ripple and the SEC is far from conclusion. Notably, the appeal decision came only a few days before October 7th, which was set as the deadline for filing.
As many industry professionals, including executives from Ripple, weigh in on the verdict, the crypto community has once again been rocked by uncertainty in the wake of the SEC decision.
SEC Issues Notice of Appeal
To contest what was first viewed as a win for Ripple and the broader cryptocurrency community, the SEC filed a notice of appeal to the United States Court of Appeal for the Second Circuit earlier today. The appeal seeks to overturn the 2023 decision that deemed XRP to be non-security.
Recall that the SEC started the legal dispute in December 2020 when it filed a lawsuit against the blockchain behemoth Ripple for allegedly selling unregistered securities in XRP and earning over $1.3 billion from these sales. Following some back and forth between the two parties, the case rose to the top of the list of cases that the cryptocurrency community was most interested in following.
In July 2023, Judge Torres issued an order declaring that the secondary sales of XRP did not qualify as security. This decision was extremely significant because it aided in the Ripple native coin’s classification. However, the court decided in August 2024 that the founders of Ripple’s issuance of XRP to institutional investors qualified as a security sale.
As a result, the court mandated that Ripple pay a $125 million civil penalty. The regulatory watchdog saw this as a partial win, which gave rise to an appeal that was submitted today.
Reactions From Ripple Key Executives
Important members in the Ripple camp have responded to the SEC’s decision on the appeal in the meantime. In particular, Stuart Alderoty, the Chief Legal Officer of Ripple, called the decision “disappointing.” Although the move was anticipated, he said it just made the agency’s already “embarrassing” situation worse.
Alderoty stressed that the SEC has been “engaging in litigation warfare against the industry” even though it could have withdrawn the action a long time ago. Additionally, he stated that the SEC’s case has been “irrational” and “misguided” from the start and that Ripple is considering whether to launch a cross-appeal.
Brad Garlinghouse, Ripple’s CEO, also commented on the subject. In a post on X (previously Twitter), he emphasized the Commission’s irrationality, claiming that if the agency had been sensible, it would have moved on from the matter.
Garlinghouse went on to say that the SEC has “lost everything that matters” and that his company and the cryptocurrency sector as a whole have already won.
Final Thoughts
The SEC’s decision to appeal Judge Torres’ ruling on XRP’s classification has reignited uncertainty within the cryptocurrency community. Initially seen as a victory for Ripple, the appeal reopens the question of XRP’s regulatory status, casting doubt on its future and extending the already drawn-out legal battle.
The appeal, which comes just before the October 7th deadline, further complicates a case that has been closely followed since the SEC’s initial lawsuit in 2020. This back-and-forth has significant implications not only for Ripple but also for the broader crypto market, where regulatory clarity is still sorely lacking.
Ripple executives, including Stuart Alderoty and Brad Garlinghouse, have expressed frustration with the SEC’s persistence, calling the agency’s actions “irrational” and “misguided.” They argue that the SEC’s approach has been counterproductive, as Ripple already won key victories in the court, particularly concerning the classification of XRP in secondary markets.
While Ripple’s leaders maintain optimism, claiming the industry has already won the important battles, the ongoing litigation continues to create legal and market instability. The case underscores the broader struggle for regulatory clarity in the crypto space, with many wondering how much longer this “litigation warfare” will last.
Victor Swaezy
Victor Swaezy is a crypto-journalist with more than 3 years of experience in covering blockchain technology and digital currencies news. Known for his comprehensive reporting, Victor has contributed to leading industry publications, providing market participants with the required knowledge to make informed decisions. When he is not working, he loves to watch movies and have a good time.