The United States Securities and Exchange Commission (SEC) has officially declared its intention to appeal a federal court decision in its prolonged legal confrontation with Ripple Labs, the company behind the cryptocurrency XRP. This move comes after a significant court ruling in August that delivered a mixed verdict in the SEC’s highly-publicized case against Ripple. The SEC’s appeal notice was filed with the Second Circuit Court of Appeals on October 2, signaling the continuation of this high-stakes legal drama.
XRP Badly Hit By SEC’s Move
In December 2020, the SEC initiated legal action against Ripple, alleging that the company had executed a $1.3 billion unregistered securities offering through the sale of XRP. The SEC argues that the district court’s decision is at odds with established Supreme Court precedents. Initially, Ripple heralded parts of the ruling as a triumph for the cryptocurrency sector, as U.S. District Judge Analisa Torres determined that XRP sales to retail investors through crypto exchanges did not breach securities laws.
However, the court also concluded that Ripple’s direct sales of XRP to institutional investors, amounting to $728 million, were unregistered securities transactions, culminating in a $125 million penalty for the firm. This development severely impacted XRP, causing its value to plummet further, with a drop exceeding 11%. At present, XRP is trading at $0.5421, reflecting a decline of over 10% in the past 24 hours.
Ripple Executives Criticize SEC’s Decision
Ripple’s Chief Legal Officer, Stuart Alderoty, expressed his disappointment regarding the SEC’s decision to appeal, though he was not surprised. He characterized the situation as a persistent embarrassment for the agency, highlighting that the court had already dismissed the SEC’s claims of reckless behavior by Ripple, with no allegations of fraud or victims involved.
Alderoty further stated, “Instead of faithfully applying the law, this agency, under its current Chair, persists in engaging in litigation warfare against the industry. We are considering whether to file a cross-appeal. Either way, the SEC’s lawsuit has been irrational and misguided from the start, and we’re ready to demonstrate that once more in the appellate court, leading the charge for the industry.”
Adding to the intrigue, the SEC’s Enforcement Director, Gurbir Grewal, announced his resignation approximately an hour before the SEC filed its appeal. Grewal’s departure has fueled speculations about potential shifts in the SEC’s approach to regulating the cryptocurrency sector.
Conclusion
The legal battle between the SEC and Ripple continues to unfold with significant implications for the cryptocurrency market, particularly for XRP. As the SEC proceeds with its appeal, Ripple remains steadfast in its defense, poised to challenge the regulator’s actions once again in court. Meanwhile, the resignation of a key SEC figure raises questions about the future direction of the agency’s crypto enforcement strategy.
