Ripple's Victory Could Be Short-Lived as SEC Submits Form-C with Detailed Appeal

Judge Analisa Torres ruled in July 2023 that the sale of XRP token by Ripple to retail investors is not security. However, the institutional sales did indeed count as security. On August 7, this year, keeping her previous decision she put a civil fine of $125 million on Ripple Labs.

The U.S. Securities and Exchange Commission (SEC) has finally submitted its detailed appeal to the Second Circuit Court of Appeals in its ongoing case against Ripple Labs. The SEC filed Form-C on Monday, October 17, nearly two months after Judge Analisa Torres ruled that the XRP token is not a security when sold to retail investors.

The SEC’s appeal largely focuses on the institutional sales of XRP, arguing that these sales should be classified as securities transactions. The Commission is also appealing the court's decision that XRP gifted for non-cash consideration, such as services rendered or goods purchased, does not constitute a securities offering.

The SEC's appeal does not challenge the court's finding that XRP sold to retail investors through exchanges or other intermediaries is not subject to securities law. This aspect of the ruling, which was a significant victory for Ripple, appears to be set in stone for now.

However, the SEC is continuing to pursue its claim that Ripple's direct sales of XRP to institutions and the personal sales by Ripple executives should be considered securities violations.

The SEC's appeal will be reviewed de novo by the appellate court, which means the court will examine the legal issues anew without being bound by the lower court's decision. This approach allows for a fresh interpretation of the securities laws in the context of digital assets.

While Ripple's victory in the retail XRP sales is a positive step, the company's legal battle is far from over. The SEC's appeal and the appellate court's subsequent ruling will determine the fate of the remaining allegations and the classification of XRP in the eyes of the law.

In related news, Ripple's Chief Legal Officer, Stuart Alderoty, took to social media to highlight the SEC's decision not to appeal the court's ruling on XRP's retail sales. Alderoty's statement on the X platform reads:

"No surprises here — once again it's been made clear. The Court's ruling that “XRP is not a security” is NOT being appealed. That decision stands as the law of the land. Stay tuned for Ripple’s Form C to be filed next week."

Alderoty's statement emphasizes the enduring legal victory for XRP in the context of retail sales, while also teasing the upcoming filing of Ripple's Form-C in the following week. This response serves to rally the community and maintain attention on the unfolding legal saga.

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