SEC Files Appeal, Ripple to Respond

• The US Securities and Exchange Commission has filed Form C to meet the deadline of its appeal following its Notice of Appeal in the case against Ripple.
• Ripple is expected to file a cross-appeal next week, meanwhile, a legal expert believes that the SEC just made a “Chicken Move.”

The US Securities and Exchange Commission (SEC) has officially filed the Civil Appeal Pre-Argument Statement, also known as Form C, after filing its notice of appeal on October 2 in the case against Ripple Labs.

According to an attachment shared by attorney James K. Filan, the Agency’s appeal does not include the recent monetary penalty of $125 million or the decision of the court presided by Judge Analisa Torres not to grant disgorgement. Instead, it focuses on the Ripple-XRP relationship and the involvement of its executives in the execution of sales.

#XRPCommunity #SECGov v. #Ripple #XRP The @SECGov has filed the Civil Appeal Pre-Argument Statement (Form C) with attachments.https://t.co/LpSFIjMZhC— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) October 17, 2024

Details of the Appeal

According to a summary provided by a Fox Business journalist Eleanor Terrett, the SEC’s appeal seeks to contest the court’s decision that Ripple’s programmatic sale and offer of XRP on digital asset trading platforms did not constitute security violations.

In addition to that, the Agency is contesting the decisions that personal sales and offers of XRP by Ripple executives – Brad Garlinghouse and Chris Larsen did not constitute breaches of securities laws. Another target of this appeal is Ripple’s distribution of XRP to employees and others.

Reviewing the attached document, CNF observed that the appeal would enable the appellate court to subject the lower court’s interpretation of securities law concerning the XRP sales on digital platforms and non-cash transactions to reconsideration. Interestingly, these legal issues are expected to be reconsidered from scratch without any particular reference to the district court’s interpretation. It is also important to note that Ripple’s victory regarding the retail sales of XRP was not part of the appeal.

An excerpt of the filing reads:

Whether the district court erroneously granted partial summary judgment in favor of the defendants with respect to Ripple’s offers and sales of XRP on digital asset trading platforms (and Garlinghouse’s and Larsen’s aiding and abetting of those offers and sales), Garlinghouse’s and Larsen’s personal offers and sales of XRP, and Ripple’s distributions of XRP in exchange for consideration other than cash. These issues are to be reviewed de novo.

Expected Action From Ripple

In late 2020, the US regulatory Agency filed a lawsuit against Ripple and its executives for offering unregistered securities. In July 2023, US district court judge Analisa Torres ruled that the sale of XRP on digital trading platforms was not considered securities.

As we reported, the court pointed out that the sale of XRP to institutional investors rather constituted securities violations. On August 7, a civil penalty of $125,035,150 was imposed on Ripple. On top of that, the court barred them from further securities breaches. With regards to the executives, the court issued in the 2023 ruling that their personal sales of XRP did not violate any security laws.

On October 2, SEC filed a Notice of Appeal with the Second Circuit Court of Appeals. However, confusion erupted on the deadline set for the Form C submission as we disclosed yesterday, October 17.

Commenting on the appeal, legal expert Jeremy Hogan labeled this decision as a “Chicken move”. According to him, the SEC earlier had the opportunity to try the case against the Ripple executives in front of the Jury but refused. Per his observation, the appeal is about money.

What I like? This appeal is about money. The injunction could change if Ripple were to lose, but only indirectly (as to order compliance).

Currently, Ripple is expected to file its Form C for cross-appeal next week. Meanwhile, the price of XRP has taken a hit as it plunges below $0.55 in a daily decline of 2.34%.

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