 
 
Ripple boss Brad Garlinghouse recently took to social media to lambast Gary Gensler’s Securities and Exchange Commission (SEC) after the regulator filed its opening brief in its appeal against the San Francisco-based company over XRP.
The SEC argued in its filing that a New York District Court was wrong to rule that XRP sold to retail investors wasn’t an unregistered securities offering under Federal Law.
SEC Says XRP Sold To Retail Investors Were Unregistered Securities
In a late Jan. 15 brief to the Second Circuit Appeals Court, the SEC indicated that it disagreed with the U.S. District Court for the Southern District Court’s earlier ruling that declared some sales of XRP to retail investors did not violate securities laws.
The agency urged the appeals court to overturn Judge Analisa Torres’ July 2023 ruling and have XRP sales to retail investors classified as unregistered securities, along with issuing a new judgment to Ripple if vacated.
Citing the Howey Test, the SEC contends that Ripple’s promotional efforts created an expectation of profits among investors, making XRP an investment contract.
 
While the SEC already filed its appeal in October 2024, following Ripple’s partial court victory in July 2023, Wednesday’s opening brief represents a formal step in the appellate process, where the SEC outlines its arguments to challenge the court’s prior decision.
The brief also challenges the lower court’s decision to exclude XRP distributed in non-cash transactions, like employee compensation and business deals, from being classed as securities.
The SEC maintains that labor and services received in exchange for XRP satisfy the “investment of money” criterion highlighted in the Howey framework.
Industry Pundits React
Ripple’s executives have frequently rejected the SEC’s assertions, insisting that XRP is a digital coin, not a security.
In a Wednesday post, Ripple’s Brad Garlinghouse posited:
“One definition of insanity….Doing the same thing over and over and expecting different results. Gensler’s SEC really took this to heart.”
Pro-crypto attorney Jeremy Hogan doesn’t believe the case will be ruled on as he “found the brief lackluster — almost as though the drafter knew he was wasting his time.”
“I was a little shocked […] that the SEC had failed to get any reasonable evidence into the record that actual XRP retail purchasers knew about Ripple and its ‘promises’ to them,” Hogan added.
Ripple’s Chief Legal Officer Stuart Alderoty called the SEC’s latest filing “just noise.” “As expected, the SEC’s appeal brief is a rehash of already failed arguments,” Alderoty continued.
Meanwhile, the price of XRP hit a seven-year high above the $3 zone on Wednesday after a report that crypto-friendly SEC commissioners were planning to throw out some non-fraud crypto enforcement cases in a significant overhaul of digital asset regulation in the US.
Alderoty has himself stated that the appeal will likely lose momentum under the incoming administration of President-elect Donald Trump.
Source: https://zycrypto.com/definition-of-insanity-ripple-ceo-asserts-as-sec-seeks-reversal-on-xrp-non-security-classification/