Catenaa, Sunday, January 19, 2025 –The US Securities and Exchange Commission has formally appealed a 2023 district court ruling that partially favored Ripple Labs, focusing on whether XRP sales to retail investors qualify as unregistered securities transactions.
The SEC argues that Ripple’s promotional efforts created profit expectations, meeting the “investment contract” definition under the Howey Test.
The appeal, filed Wednesday, also challenges the exclusion of XRP distributed in non-cash transactions from securities laws, asserting these meet the “investment of money” criterion.
Ripple, maintaining that XRP is a digital currency, dismissed the SEC’s filing as “rehashing failed arguments.”
Chief Legal Officer Stuart Alderoty expressed optimism about the case losing traction under the incoming Trump administration.
The legal battle, initiated in 2020, has sparked significant debate within the crypto industry, with stakeholders viewing the case as pivotal for regulatory clarity.
The district court previously ruled that programmatic XRP sales to public buyers and employee distributions did not constitute securities, but institutional sales did.
A reversal could empower the SEC to intensify enforcement actions, while a defeat might limit its authority.
Ripple has criticized the SEC’s approach, framing it as stifling innovation. A resolution in the appeals court is expected later this year, as the case continues to draw attention from lawmakers and investors.
