What Exactly is Gary Gensler Appealing?

The SEC has filed an appeal against a previous ruling that deemed programmatic sales of XRP as not constituting investment contracts, a decision that significantly reduced the penalties Ripple faced. However, there has been a lot of confusion regarding this appeal and XRP enthusiasts took to social media to express their frustration.

Additionally, discussions centered around the complexities surrounding secondary sales of XRP, clarifying that the court did not specifically rule on transactions involving retail investors trading on exchanges.

A user asked whether the SEC’s recent appeal letter only referenced the penalties judgment, not the broader ruling from last year, and if this limits the SEC to appealing just the penalties aspect. Marc explained that the appeal references the final judgment, which triggers both parties’ rights to appeal. This judgment also finalizes the previous year’s summary ruling, which is the main focus of the SEC’s appeal, though penalties and disgorgement will likely be included as well.

In response to another question about whether the SEC will appeal everything or just the fine and Ripple’s sales of XRP, Marc indicated that the SEC is likely to challenge the court’s decision that Ripple’s programmatic and non-cash XRP sales were not securities transactions. This had already been hinted at a year ago, with the inclusion of disgorgement and penalties, though the latter isn’t the central objective of the appeal.

Another user said that the SEC originally requested much larger penalties than what was ultimately ruled by Judge Torres, suggesting the SEC was primarily focused on monetary penalties. Marc clarified that the SEC’s main objective is not the money itself, as it doesn’t go to them, though they will likely raise arguments regarding the penalty and the absence of disgorgement while pursuing the appeal.