• SEC filed a notice of appeal in the Ripple lawsuit seeking to overturn a ruling that XRP is not a security
• SEC enforcement chief Gubir Grewal stepped down on October 11th
• Bitwise filed for an XRP ETF trust in the state of Delaware on September 30th
The United States Securities and Exchange Commission (SEC) has filed a notice of appeal in the Ripple lawsuit, seeking to overturn a ruling that went in favor of Ripple Labs earlier this year. This latest move shows the regulatory agency is not backing down in its pursuit of Ripple and XRP.
Background of the Lawsuit
The SEC first filed the lawsuit against Ripple Labs and its founders in December 2020. The lawsuit alleges that Ripple’s sales of XRP constituted unregistered securities offerings.
Key Points of Judge’s Ruling
In March 2023, Judge Analisa Torres issued a ruling that was seen as a significant victory for Ripple. Judge Torres ruled that XRP was not a security in and of itself, because it failed to meet all the conditions of the SEC’s Howey Test for determining whether an asset is an investment contract.
However, the judge did rule that some early institutional sales of XRP by Ripple executives did qualify as securities transactions.
SEC Appeals Judge’s Ruling
On October 2nd, the SEC filed a notice indicating it would appeal Judge Torres’ ruling. The SEC is seeking to overturn the judge’s determination that secondary market sales of XRP do not constitute securities transactions.
If the appeal succeeds, it could potentially classify all XRP transactions as securities sales, which would be a major blow to Ripple and the broader crypto industry.
What’s Next
The SEC’s appeal ensures the legal battle between the regulator and Ripple will continue. The outcome of the appeal could have significant ramifications for the status of XRP and the authority of the SEC over cryptocurrencies more broadly.
In the meantime, interest in XRP remains strong despite the lawsuit. For example, Bitwise filed for an XRP exchange-traded fund (ETF) trust in late September, showing institutional demand for exposure to the asset. However, an SEC approval of an XRP ETF could face delays due to the ongoing litigation.
The crypto community will be watching closely as the appeal process moves forward, hoping for a final resolution to the high-profile lawsuit.
