Ripple Labs has escalated its legal battle with the U.S. Securities and Exchange Commission (SEC) by submitting a detailed cross-appeal. This latest filing, outlined in Form C, emphasizes Ripple’s intent to address four issues it believes were improperly decided in the SEC’s lawsuit against it. Ripple’s move follows the court’s previous ruling on XRP’s classification in institutional sales, which deemed those sales as investment contracts, leading to a $125 million fine and an injunction on future sales of XRP.
Ripple’s cross-appeal mainly focuses on contesting the legal treatment of some of its XRP transactions. The Securities Act of 1933 demands that investment contracts have a legally enforceable agreement, continuing pledges, and defined buyer rights of share in the revenues depending on the seller’s work. Ripple has asked the court to consider these elements singly when deciding on XRP transactions.
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Ripple’s Key Arguments and the SEC’s Response
Ripple aims to bolster a fair notice defense by challenging the court’s prior categorization of some XRP sales under the SEC’s Howey test for securities. Ripple argues that due to the contradictory nature of the directions provided by the SEC, the company could not understand whether it was operating in a way contrary to federal laws regulating securities. Ripple’s filing suggested that because of such a lack of clarity from the SEC, Ripple did not fully know its appropriate course on compliance with regulatory requirements.
Ripple also seeks to reverse the injunction on the company’s institutional XRP sales since this order could limit its operations. Ripple argues that the Rule 65 guidelines that steer the issuance of injunctions should bar such restrictions in the first place.
At the same time, the SEC has asked the court to grant it until January 15, 2025, to respond to the principal brief. This has elicited criticism from the XRP community, calling the latest action by the SEC as another ploy to postpone the case further.
According to Ripple’s Chief Legal Officer, Stuart Alderoty, the cross-appeals entire briefing process could extend until July 2025, with the following procedural steps involving sequential submissions from both parties. The outcome is expected to hold significant implications for Ripple and the broader cryptocurrency industry, as it may influence the regulatory landscape for digital assets in the U.S.
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