SEC Pushes Ripple Appeal Forward, Despite Clock Running Out

Key Takeaways

• The SEC has filed its appeal against Ripple despite missing the deadline.
• The agency’s case against Ripple is weakened by its admission that not all crypto tokens are securities.
• The outcome of the appeal will have significant implications for regulating digital assets in the U.S.

Despite the clock ticking down to zero, the Securities and Exchange Commission (SEC) has pushed forward with its appeal against Ripple, submitting its Form C just 24 hours after the original deadline had passed.

The SEC’s Appeal

The SEC’s appeal against Ripple reveals that the agency is not contesting the court’s earlier finding that XRP is not a security. Nor is it appealing the $125 million fine or the decision to deny disgorgement.

Ripple’s chief legal officer, Stuart Alderoty, had anticipated this outcome , noting that XRP’s security status was mentioned in dicta and, therefore, not appealable.

He took to Twitter to reiterate this point, saying it was “no surprise” that the SEC would not challenge XRP’s non-security status.

Instead, the SEC’s Form C appeal focuses on several key aspects of the lawsuit, including:

• Ripple’s programmatic sales of XRP, both cash and non-cash, on digital asset trading platforms.
• The alleged aiding and abetting of these sales by Ripple executives Brad Garlinghouse and Chris Larsen.
• The offers and sales of XRP by Garlinghouse and Larsen.
• Ripple’s distribution of XRP to employees.

Despite the drama surrounding the filing deadline, the SEC’s eventual appeal has only added to the uncertainty.

The agency’s decision to appeal certain aspects of the lawsuit will likely prolong the legal showdown for another year, leaving the XRP community on edge.

The Drama Unfolds

When the SEC failed to meet the Oct. 16 deadline to file its appeal plan, many in the crypto community thought it had blown its chance to appeal the Ripple judgment.

However, key Ripple executives were cautious in their celebration, aware that the SEC has a history of flouting rules and finding ways to override them.

The deadline drama was marked by confusion and drama, with the court acknowledging the appeal motion on Oct. 4.

Some argued that this meant the deadline was actually Oct. 18, but former SEC employees and legal experts clarified that, based on the original filing date, the deadline was indeed Oct. 16.

Even after the SEC finally filed its Form C appeal on Wednesday, the drama didn’t entirely subside.

The filing appeared to show two dates—Oct. 16 and Oct. 17—sparking further confusion.

Some users believe the discrepancy may be due to a docketing time lag . The SEC apparently pulled the district court docket early on Wednesday morning, and the court officially acknowledged it on Oct. 17.

A Lost Battle?

The SEC’s lawsuit against Ripple, which centered on whether XRP token sales constitute a security, appears to have lost its way.

After three years of court battles and a judge’s affirmation that XRP sales to retail customers do not constitute a security, the agency’s case looks increasingly tenuous.

In a recent amended complaint in the Binance lawsuit, the SEC even acknowledged that its use of the term “crypto asset security” is controversial and did not intend to imply that all crypto tokens are securities.

This admission has weakened the agency’s lawsuit against Binance, Kraken, and Coinbase, with the crypto platforms quick to point out the SEC’s blunder and overreach in court.

With the filing of its appeal in the Ripple judgment, the SEC is struggling to justify its regulatory approach, which relies heavily on enforcement actions against crypto firms.