In a significant update late Thursday, the US Securities and Exchange Commission (SEC) officially filed Form C in its ongoing litigation against Ripple Labs. This crucial step outlines the grounds for the SEC’s appeal against the final ruling issued by Judge Analisa Torres on August 7. Originally, the SEC had filed a Notice of Appeal on October 2, which did not include detailed arguments, making this recent filing expected yet pivotal.
Dissecting the Appeal: Ripple vs. SEC
The SEC’s appeal specifically targets certain favorable aspects of the summary judgment awarded to Ripple. Legal expert James “MetaLawMan” Murphy provided insights, highlighting that the SEC is contesting rulings related to Ripple’s XRP sales through exchanges, the distribution of XRP to employees and others, and the sales of XRP by Ripple executives Brad Garlinghouse and Chris Larsen.
Ripple Appeal Update
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The SEC’s Form C was slightly delayed according to some views, being filed just a day past the expected deadline. Their appeal challenges the summary judgment ruling on several points, including:
- Ripple’s XRP sales through exchanges
- Ripple’s distribution of XRP to employees and others
- Sales of XRP by Garlinghouse and Larsen
Interestingly, the SEC has chosen not to appeal the remedies and disgorgement ruling, nor Judge Torres’s decision that XRP itself does not qualify as a security. Murphy noted, “This aligns with our expectations, although it’s somewhat surprising they didn’t contest the ruling on disgorgement.”
Implications for Ripple Executives
Fred Rispoli, a pro-XRP attorney and founder of HODL Law, analyzed the implications for Ripple’s top executives, Brad Garlinghouse and Chris Larsen. “Just when they thought they were out, the SEC pulled Brad and Chris back in,” he commented. Rispoli emphasized that the SEC never agreed to dismiss all claims against the executives, specifically those related to institutional sales, suggesting the agency remains focused on other sales categories.
High Stakes at the Second Circuit Court of Appeals
The case now advances to the Second Circuit Court of Appeals, a jurisdiction known for its rigorous standards. Rispoli stressed, “The Second Circuit is the big leagues, where the SEC cannot afford to make errors like it did at the district court level.” He also highlighted the strategic decision by the SEC to abandon the disgorgement argument, which had previously failed before Judge Torres.
Procedural Nuances and Potential Consequences
There is some procedural uncertainty surrounding the timing of the SEC’s filing. While the Form C is dated October 16, it was officially filed on October 17, raising questions about compliance with the 14-day deadline following the Notice of Appeal. Murphy remarked, “We should soon learn whether the Second Circuit will determine if the SEC missed its deadline.”
Failing to meet this deadline could jeopardize the SEC’s appeal, as outlined by the Local Rules of the Second Circuit, which state that non-compliance may result in dismissal. However, Rispoli noted that federal agencies often receive leniency in such matters, suggesting even a weak justification from the government might suffice to proceed.
Future Considerations and Market Impact
Rispoli concluded with a warning that the SEC might still introduce unexpected challenges. “The SEC has announced it could appeal any aspect of this case. While some issues are apparent, others, like whether XRP is inherently an investment contract, remain uncertain until further briefings are filed.”
As of the latest market update, XRP is trading at $0.5474. Investors and stakeholders remain vigilant as the legal proceedings continue to unfold, with potential implications for the cryptocurrency market at large.
