Ripple Files Form C Against SEC—Here’s What They’re Appealing

Key Takeaways

• Ripple has launched its cross-appeal against the SEC.
• The company is challenging four key issues.
• Ripple’s top executives are confident of winning the appeal.

In a swift response to the Securities and Exchange Commission’s (SEC) appeal, Ripple has filed a cross-appeal.

The filing comes just days after Ripple execs vowed to “leave nothing on the table” in its defense.

While the SEC has zeroed in on Ripple’s XRP sales and founder transactions in its appeal, here’s what Ripple’s cross-appeal has in its sights.

Four Key Issues at Stake

Ripple’s Form C highlights four critical issues that the company believes the court should reconsider.

Ripple is questioning whether an investment contract must be legally binding.

While this would not absolve the company of the $125 million judgment, attorney Jeremy Hogan argues that Ripple is pushing for this clarification primarily to benefit the broader crypto ecosystem, as winning this issue “would cripple the SEC enforcement regime.”

The company is also contesting the classification of institutional sales of XRP as securities.

By appealing this verdict, Ripple seeks to re-argue the Howey test’s fundamental principles, a decades-old legal framework for determining what constitutes security.

As part of its appeal, Ripple has revived the fair notice defense, which allows companies to argue that they did not know their actions violated the law. By invoking this defense, Ripple is attempting to shift the burden of proof back onto the SEC.

Lastly, Ripple is challenging the validity of the injunction, citing the SEC’s alleged failure to provide sufficient regulatory clarity. The company argues that the agency’s vague instructions to “follow the law” are insufficient, rendering the injunction invalid.

By challenging these points, Ripple aims to strengthen its case further and undermine the SEC’s claims.

Ripple Is Confident

Top Ripple executives, including CEO Brad Garlinghouse and Chief Legal Officer Stuart Alderoty, have expressed confidence in their chances of winning the appeal.

Garlinghouse has stated he is confident he will “win the appeal, which would put a dagger in Gary Gensler’s whole agenda around crypto regulation.”

Alderoty, in turn, reminded the crypto community that the SEC has not disputed the court’s ruling affirming XRP’s non-security status. He noted that the toughest challenge is behind them, with the SEC facing slim odds in the Second Circuit.

“The Second Circuit, traditionally, is not a fan of the SEC. They’re not a fan of regulatory overreach. And statistically, if you lose, your chances of getting the Second Circuit to reverse is around 10% or less,” Alderoty noted.

In contrast, the SEC’s request for an extension to file its principal brief has raised questions about the agency’s confidence in its case.

The SEC has requested that the deadline for filing its principal brief be extended to Jan. 15, 2025.