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SEC Appeals XRP Ruling: Ripple Criticizes as Repetitive and Politically Fragile

XRP

The SEC appeals the XRP ruling, challenging retail investor classifications. Ripple dismisses the move as repetitive and signals confidence in thriving despite ongoing litigation.

The U.S. Securities and Exchange Commission (SEC) has escalated its legal battle against Ripple Labs, filing an appeal to challenge a recent district court ruling on XRP token classifications. The SEC’s appeal argues that the court erred in exempting XRP sales to retail investors on secondary markets from securities laws, a move the agency claims undermines investor protections.

The SEC’s filing, submitted to the U.S. Court of Appeals for the Second Circuit, reiterates its stance that Ripple’s promotional activities fostered a unified expectation of profit among all investors. The agency also disputes the lower court’s exclusion of non-cash transactions, such as XRP payments to employees and partners, from securities law considerations. Ripple’s executives, however, remain dismissive. CEO Brad Garlinghouse criticized the SEC’s appeal, stating, “One definition of insanity… doing the same thing over and over and expecting different results.”

Ripple (XRP) Position and Market Implications

Ripple Chief Legal Officer Stuart Alderoty labeled the SEC’s filing as a “rehash of already failed arguments,” adding that the appeal reflects a politically fragile stance likely to shift under a new administration. Ripple asserts that the ongoing lawsuit will not derail its operations and emphasized the potential for a more pro-innovation regulatory framework in the future. Despite the appeal, XRP continues to perform strongly, surpassing the $3 mark for the first time in years and inching closer to its historic high of $3.40.

Background and Broader Impact

The SEC’s case against Ripple stems from a 2020 lawsuit alleging that XRP sales violated federal securities laws. In July 2023, a district court ruled that while XRP sales to institutional investors did breach securities laws, sales on secondary markets did not qualify as investment contracts. The distinction has significant implications for digital asset regulation and investor protections under the SEC’s oversight.

Looking Ahead

President-elect Donald Trump has signaled a shift in regulatory priorities, hinting at an innovation-focused approach to digital assets. Ripple remains optimistic about its growth prospects, despite ongoing legal challenges, and anticipates greater clarity for the cryptocurrency industry.

Stay updated on this pivotal legal battle by following our coverage on cryptocurrency regulations and market developments.