SEC Appeal Does Not Concern XRP Secondary Sales, Top Lawyer Clarifies

• Bill Morgan clarified that the SEC’s appeal targets Ripple’s programmatic sales, not secondary market sales by individual holders.
• XRP’s legal status as a non-security is not part of the appeal.
• The debate continues over whether the SEC’s appeal will delay approval of the XRP ETF.

Attorney Bill Morgan has clarified that the SEC’s latest appeal in the Ripple Labs case does not apply to secondary market sales of XRP made by retail investors. The appeal focuses on Ripple’s programmatic sales and distributions of XRP, not individual transactions on exchanges.

The clarification comes after the U.S. SEC filed an appeal notice on October 2nd, following Judge Analisa Torres’s ruling in July.

Confusion Concerning SEC Appeal Scope

In a post on X,  Morgan explained that Judge Analisa Torres did not rule on secondary sales of XRP, which involve transactions made by individuals on exchanges, such as retail investors trading XRP. The ruling only applied to Ripple’s programmatic sales of XRP, where Ripple used automated processes to sell the cryptocurrency on the open market.

Morgan emphasized that secondary sales were not part of the original ruling and cannot be included in the appeal. The SEC’s focus is on Ripple’s direct sales and potential penalties related to those sales.

This clarification is important because some commentators believe secondary sales of XRP and Ripple’s programmatic sales are the same thing.

XRP Status Unchanged

Attorney Jeremy Hogan also weighed in on the SEC’s decision to appeal, calling it a risky move for the regulator. Hogan believes the SEC’s chances of winning the appeal are low due to the fact-heavy nature of Judge Torres’s ruling.

Even if the SEC were to succeed, Hogan believes it would result in additional financial penalties for Ripple without changing XRP’s legal status or its use by Ripple.

Hogan further noted that the SEC’s appeal will not challenge the ruling that XRP itself is not a security. The SEC “will NOT (and cannot) appeal that XRP is not a security,” he stated.

According to Hogan, the appeal process could extend until late 2025 or early 2026, delaying a final resolution.

XRP ETF Future Remains in the Air

This appeal comes at a time when asset manager Bitwise has filed for an XRP ETF with the SEC, aiming to offer institutional access to XRP. However, XRP enthusiasts remain uncertain about the approval, especially in light of the SEC’s ongoing legal battle with Ripple.
An X user expressed skepticism, stating that the ongoing SEC appeal could delay the approval of an XRP ETF by 6 to 18 months, similar to the delays seen with Bitcoin spot ETFs. However, another user, Moon Lambo, disagreed, arguing that the appeal does not involve XRP’s secondary market sales and would not impact the approval of an XRP ETF.