SEC Appeals Ripple Court Ruling on XRP Sales as Industry Criticizes Agency
The US Securities and Exchange Commission (SEC) has filed an appeal in the Ripple lawsuit, challenging a July 2023 court ruling. The SEC questions if Ripple's sales of XRP to retail investors constitute unregistered securities under federal law.
- SEC seeks to overturn the district court's ruling that XRP transactions through crypto platforms are not "investment contracts" as per the Howey test.
- The court determined that investors were unaware of Ripple Labs as the seller.
- SEC argues Ripple's marketing created profit expectations among investors, suggesting XRP qualifies as an investment contract.
- This filing is part of the formal appellate process following a previous appeal by the SEC in October 2022.
- SEC claims that sales on exchanges do not meet necessary standards and investor expectations depend on issuer actions rather than seller identity.
Industry Reaction
- Ripple CEO Brad Garlinghouse criticized the SEC for repeating failed arguments, calling it "one definition of insanity."
- Ripple’s Chief Legal Officer Stuart Alderoty described the SEC's appeal as noise, asserting that Ripple will respond formally.
- Attorney Bill Morgan labeled the SEC’s stance as lacking understanding of crypto markets, stating price movements correlate with broader market trends.
- XRP's price surged over $3.0, marking a 9.43% increase in 24 hours, with a market cap exceeding $176 billion and trading volume up 67% to $22.69 billion.