Ripple Challenges SEC Appeal: Old Arguments Resurface in Legal Battle

Ripple remains steadfast as it dismisses the SEC's latest appeal as a rehash of previously rejected arguments. On January 15, the SEC filed an opening brief challenging the earlier court decision favoring Ripple, arguing that Ripple’s XRP sales to retail buyers qualify as unregistered securities transactions.

In the filing, the SEC asserted:
“The district court erred both factually and legally in concluding that defendants’ offers and sales of XRP to public buyers on crypto platforms and for non-cash consideration were not offers and sales of investment contracts.”

The agency further argued that Ripple’s activities created profit expectations among buyers, fulfilling the Howey Test criteria for an investment contract. Consequently, the SEC requested the Appeals Court to overturn the lower court's decision.

Background of the Case

This appeal follows a partial defeat for the SEC in July 2023, when Judge Analisa Torres ruled that only XRP sales to institutional investors constituted securities, while sales to retail buyers did not breach federal securities laws. The legal battle, which began in December 2020, saw Ripple fined $125 million in August 2024. Despite this, the SEC’s push for a reversal has reignited the conflict.

Ripple Responds

Ripple’s Chief Legal Officer, Stuart Alderoty, dismissed the SEC's arguments as redundant, emphasizing the company's focus on growth amid evolving regulations. “The SEC’s lawsuit is just noise. A new era of pro-innovation regulation is coming, and Ripple is thriving,” Alderoty said, reinforcing Ripple’s commitment to pushing through the challenges.

CEO Brad Garlinghouse also criticized the SEC’s repetitive approach, saying, “[The SEC’s brief is] one definition of insanity…. Doing the same thing over and over and expecting different results. Gensler’s SEC really took this to heart.”

Ripple continues to position itself as a trailblazer in regulatory clarity, confident that the legal system will uphold its stance, ensuring a path forward for innovation in the crypto space.