Ripple Appeals SEC on XRP Institutional Sales

Ripple Labs has filed an appeal of the SEC’s recent ruling on its institutional XRP sales. The U.S. Court of Appeals for the Second Circuit will handle the appeal. Stuart Alderoty, the Chief Legal Officer, confirmed the filing on October 25. He stated that the SEC cannot introduce any new evidence or ask for additional records from Ripple at this stage.

The appeal challenges a ruling from the U.S. District Court for the Southern District of New York. That court determined Ripple’s institutional sales of XRP to accredited investors were securities transactions and fined the company $125 million. Ripple claims the court incorrectly applied the Howey test. This test defines how a transaction qualifies as an investment contract and, therefore, a security.

In its Form C filing, Ripple requested a de novo review. This means the appeals court can independently reexamine the legal issues without relying on previous court conclusions. Ripple aims to clarify and potentially reshape the interpretation of securities law regarding institutional XRP sales.

Alderoty expressed optimism about the appeal. He noted that the SEC’s actions have become “background noise” for Ripple and the broader crypto sector. This development follows the SEC’s own appeal on October 16. In that appeal, the agency questioned certain interpretations but upheld the decision that XRP is not a security when sold on exchanges through programmatic sales.

The dispute has roots in Judge Analisa Torres’ ruling from July 2023. That ruling marked a partial win for Ripple by declaring that XRP is not a security in the context of exchange sales.