XRP saw a significant drop of over 10% on Thursday following the SEC’s decision to appeal the court’s ruling in its lawsuit against Ripple Labs. This comes after Judge Analisa Torres handed down a final ruling on August 7, imposing a $125 million fine on Ripple, which was far less than the SEC’s initial demand of $2 billion.
The court ruled that Ripple’s sales of XRP to institutional investors were considered securities transactions, leading to the penalty. However, Judge Torres emphasized that these sales were neither fraudulent nor malicious, as no claims of fraud or financial harm were established. The ruling also clarified that while some XRP transactions are classified as securities, XRP itself is not inherently a security, providing crucial regulatory clarity for Ripple and the broader crypto industry.
SEC Appeal Seeks to Classify XRP as a Security Across All Transactions
The SEC filed an appeal with the Second Circuit Court of Appeals, aiming to challenge the ruling on several fronts. The agency argues that the district court’s decision conflicts with Supreme Court precedents and established securities laws. The SEC insists that XRP should be classified as a security in all sales, whether to institutional or retail investors, and argues that XRP’s classification should not vary based on the type of transaction.
Ripple’s Response to the Appeal: ‘Embarrassing’ for the SEC
Stuart Alderoty, Ripple’s chief legal officer, described the SEC’s appeal as “disappointing but not surprising.” He expressed on X (formerly Twitter) that this appeal merely extends what has already been an “embarrassment” for the SEC. He noted that the court had rejected the SEC’s claims that Ripple acted recklessly, and there were no victims or losses in the case.
Meanwhile, Ripple CEO Brad Garlinghouse reaffirmed the company’s commitment to defending its position in court for as long as necessary. “XRP’s status as a non-security is the law of the land today – and that does not change even in the face of this misguided – and infuriating – appeal,” he said.
Speaking at the KBW2024 event in Seoul, South Korea, Garlinghouse stated that while he was uncertain whether the SEC would appeal, he believed there was no viable path for the regulator to overturn the fundamental ruling that “XRP is not, in and of itself, a security.”
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