Ripple Labs has recently filed a cross-appeal in response to the ongoing legal battle with the US Securities and Exchange Commission (SEC) over the XRP token. This comes after the SEC filed its own appeal earlier this month, aiming to reverse a court ruling that found Ripple’s programmatic sales of XRP to retail investors did not violate securities laws.
The cross-appeal by Ripple has been submitted to the United States Court of Appeals for the Second Circuit and will now be combined with the SEC’s appeal into a single case. This move extends the legal proceedings that have been closely watched by the crypto industry since the SEC’s initial complaint in 2020.
Ripple’s appeal challenges the final judgment that required the company to pay $125 million in civil penalties for its institutional sales of XRP tokens. While this amount was significantly lower than the SEC’s initial demand of nearly $2 billion, it was still higher than Ripple’s proposed penalty of $10 million.
Stuart Alderoty, Ripple’s chief legal officer, expressed the company’s intention with the cross-appeal filing to leave no stone unturned in the legal battle. He also anticipated that the SEC would continue to argue that XRP sales on exchanges and distributions to employees and developers should be considered securities.
In a statement on social media, Alderoty voiced optimism about the outcome of the appeal and criticized SEC Chair Gary Gensler’s approach to regulating the industry. Ripple CEO Brad Garlinghouse echoed similar sentiments, accusing the SEC of causing confusion and uncertainty in the crypto space in the US.
The legal dispute between Ripple and the SEC dates back to December 2020 when the SEC sued Ripple for allegedly offering unregistered securities through XRP, amounting to $1.3 billion. After a lengthy legal process, a court ruling in July 2023 determined that while institutional sales of XRP breached securities laws, sales to retail investors did not.
Following this ruling, the SEC requested a $2 billion fine, which was partially rejected by the court in August 2023, leading to the $125 million penalty imposed on Ripple. The recent appeal by the SEC triggered Ripple’s decision to file a cross-appeal in an effort to secure a more favorable outcome and address the regulatory uncertainties in the industry.
As the legal battle continues, both Ripple and the SEC remain committed to asserting their positions and seeking resolution through the appeals process. The outcome of these appeals will have significant implications for the future regulation of cryptocurrencies and the clarity provided to industry participants in the US.