Ripple Vows to Fight Back after SEC Challenges XRP Ruling

The U.S. Securities and Exchange Commission (SEC) has officially appealed a federal judge's decision in its high-profile case against Ripple, reigniting a legal clash that has spanned nearly four years.

The appeal was filed with the Second Circuit Court of Appeals on Oct. 2, two months after Judge Analisa Torres issued her final ruling.

The SEC argued that Torres' decision conflicts with the securities laws.

"We believe that the district court decision in the Ripple matter conflicts with decades of Supreme Court precedent and securities laws, and we look forward to making our case to the Second Circuit,” said the SEC.

XRP plummeted after the SEC's appeal notice. The token dropped by over 8% in the 24 hours, trading at around $0.52.

This legal battle dates back to 2020, when the SEC accused Ripple of raising $1.3 billion through the sale of unregistered securities in the form of XRP.

In July 2023, Judge Torres ruled that Ripple violated federal securities laws when selling XRP tokens to institutional investors. However, she clarified that Ripple’s programmatic sales to retail investors on public exchanges did not break securities regulations. This split decision was hailed as a partial victory for Ripple and the broader crypto industry.

Following the ruling, the SEC imposed a $125 million fine on Ripple in August for its institutional sales. This was significantly lower than the nearly $2 billion the SEC initially requested. In September, both the SEC and Ripple requested a stay on the final judgment.

The SEC, however, appears to be dissatisfied and has sought to appeal the ruling.

Ripple Responds

Ripple's CEO, Brad Garlinghouse, vowed to fight the case as long as needed.

“Somehow, they still haven't gotten the message: they lost on everything that matters. Ripple, the crypto industry, and the rule of law have already prevailed,” Garlinghiosue tweeted. “XRP’s status as a non-security is the law of the land today — and that does not change even in the face of this misguided — and infuriating appeal.”

Ripple’s Chief Legal Officer Stuart Alderoty called the appeal "disappointing, but not surprising," hinting at a potential cross-appeal from Ripple.

‘Big Mistake’

Lawyer Jeremy Hogan, a partner at Hogan & Hogan, said it is a big mistake by the SEC.

"It will appeal the programmatic sales ruling, and if it wins, it will get more money from Ripple and have protected no one,” he said. “Ripple will raise its "Blue Sky" law issue and, if it wins, the SEC's ability to regulate the entire crypto space is essentially destroyed. Not a good calculation of risk by the SEC.”

Hogan pointed out that a ruling from the Appellate Court won't happen until late 2025 or early 2026. "Even if the SEC were to 'win' on appeal, it's very, very likely just a matter of money—nothing would change as to XRP and its use by Ripple."

On Sept. 30, Bitwise began the initial process to launch an exchange-traded fund (ETF) for XRP, the cryptocurrency associated with Ripple Labs' network. The company submitted a Form S-1 to the U.S. Securities and Exchange Commission (SEC) on Oct. 2, formally requesting approval for an XRP ETF.