SEC’s Ripple Appeal Makes No Attempt To Classify XRP As A Security

The U.S. Securities and Exchange Commission (SEC) is appealing the outcome of its lawsuit against Ripple Labs, but the appeal notably does not seek to designate XRP as a security.

On Oct. 17, the SEC filed its Form C Civil Appeal Pre-Argument Statement concerning last year’s ruling from Judge Analisa Torres in the agency’s lawsuit against Ripple Labs.

In August 2023, Torres fined Ripple Labs $125 million for violating federal securities laws through its institutional sales of XRP. The SEC’s complaint had sought $876.3 million in disgorgement, $876.3 million in penalties, and $198.1 million in prejudgment interest.

Torres found that Ripple had not engaged in fraud, misappropriation, or other “moire culpable conduct,” nor had its actions resulted in substantial losses for investors — justifying a lesser punishment than that requested by the SEC.

“The SEC is appealing the summary judgment ruling on: Ripple's XRP sales through exchanges; Ripple's distribution of XRP to employees and others; and Garlinghouse and Larsen's sales of XRP on exchanges,” tweeted MetaLawMan, a popular legal influencer. “Mildly surprising that they did not appeal the $0 ruling on disgorgement.”

Notably, the filing does not attempt to appeal Torres’ determination that XRP and other digital do not inherently comprise securities, regardless of whether their primary distribution takes the form of a securities investment contract. The ruling appeared to undermine the argument underpinning much of the SEC’s campaign of regulation-by-enforcement against the crypto industry, and has since been cited as legal precedent.

“Once again it’s been made clear, the Court’s ruling that ‘XRP is not a security’ is NOT being appealed,” tweeted Stuart Alderoty, Ripple’s chief legal officer. “That decision stands as the law of the land.”

The filing followed yesterday’s confusion on social media, with media outlets and legal experts initially reporting that the SEC had missed a 14-day deadline to file its Form C on Oct. 16 after submitting its Notice of Appeal on Oct. 2. However, the filing was not docketed until Oct. 4, meaning the SEC had until the end of Oct. 18 to submit its Form C.

The price of XRP is up 2.2% over the past seven days, according to The Defiant's crypto price feeds.