SEC Appeals Ripple Ruling, Challenging XRP’s Classification

The legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) has entered a new chapter. 

On Wednesday, the SEC formally filed an appeal against the July 2023 court ruling that found XRP sales to retail investors were not securities. This ongoing case, which began in December 2020, could set a precedent for how digital assets are regulated in the United States.

Ripple Lawsuit Background

The SEC first sued Ripple Labs and its executives on December 22, 2020, alleging that the company conducted an unregistered securities offering worth $1.3 billion through the sale of XRP tokens. 

According to the SEC, Ripple promoted XRP as an investment, creating an expectation of profits tied to the company’s efforts.

Ripple has consistently denied these claims, arguing that XRP is a digital currency like Bitcoin or Ethereum and does not meet the criteria for security under the Howey Test. 

Despite Ripple’s defence, the lawsuit caused major disruptions, including the delisting of XRP from major exchanges like Coinbase and Binance.US and a sharp drop in its market value.

In July 2023, Ripple partially won when Judge Analisa Torres ruled that XRP was not a security when sold on exchanges to retail investors. 

However, the court found that institutional sales of XRP did qualify as unregistered securities transactions, leaving the SEC partially vindicated.

SEC’s Appeal and Its Arguments

The SEC’s appeal, filed in October 2024 and formally detailed in an opening brief on Wednesday, challenges key aspects of the July 2023 ruling. Specifically, the agency disputes the court’s finding that XRP sales on exchanges do not qualify as securities transactions.

^{Source: Twitter (X)}

The SEC argues that Ripple’s promotional efforts created an expectation of profit for retail investors, regardless of where or how XRP was sold. 

The agency also claims that even non-cash transactions, such as XRP distributed as employee compensation or business incentives, meet the “investment of money” requirement under the Howey Test.

Ripple’s Chief Legal Officer Stuart Alderoty criticized the appeal, calling it a “rehash of failed arguments” and expressing confidence that the case would not gain momentum under the incoming Trump administration, which is expected to take office on January 20, 2025.

Read more about XRP: 

How to buy XRP (XRP)

XRP (XRP) Price Today

How to Stake XRP (XRP)

XRP to USD: Convert Ripple to US Dollar

XRP (XRP), Market Cap, Price Today & Chart History

Trade XRP Futures

Implications for the Crypto Industry

The outcome of this appeal could have far-reaching consequences for the cryptocurrency industry. If the SEC succeeds in overturning the July 2023 ruling, it could gain broader authority to classify and regulate digital assets as securities. 

This could lead to increased enforcement actions against other crypto projects, creating uncertainty for the industry.

Conversely, if Ripple prevails, it could limit the SEC’s ability to regulate cryptocurrencies and provide much-needed clarity for market participants. 

Many industry stakeholders view this case as a bellwether for U.S. crypto regulation, and the final decision could influence the development of blockchain projects and digital asset markets for years to come.

Despite the legal uncertainty, XRP has shown resilience in the market. The token recently surged past $3, its highest level since 2018, reflecting investor optimism about Ripple’s chances of success.

Read also: XRP ETFs: A Game-Changer for Crypto in 2025

Conclusion

The SEC’s appeal in the Ripple case marks another significant moment in this long-running legal battle. While Ripple has achieved partial victories, the outcome of this appeal will likely shape the future of cryptocurrency regulation in the United States.

Investors and industry participants are closely watching this case as it continues to unfold. Whether the court sides with the SEC or Ripple, the decision will have a lasting impact on how digital assets are classified and regulated.

Frequently Asked Questions

1. Why is the SEC appealing the Ripple ruling?
The SEC is appealing to overturn the July 2023 decision that XRP sales to retail investors do not qualify as unregistered securities.

2. What does this case mean for the crypto industry?
The Ripple case could set a precedent for how digital assets are classified, potentially impacting regulation and enforcement actions in the U.S.

3. When is the appeal expected to be resolved?
The appeals court is unlikely to reach a final decision until later in 2025, leaving the case unresolved for now.

Investor Caution 

While the crypto hype has been exciting, remember that the crypto space can be volatile. Always conduct your research, assess your risk tolerance, and consider the long-term potential of any investment.

Bitrue Official Website:

Website: https://www.bitrue.com/

Sign Up: https://www.bitrue.com/user/register

Disclaimer: The views expressed belong exclusively to the author and do not reflect the views of this platform. This platform and its affiliates disclaim any responsibility for the accuracy or suitability of the information provided. It is for informational purposes only and not intended as financial or investment advice.