Ripple files appeal on XRP institutional sales

Ripple Labs challenged a recent decision by the US Securities and Exchange Commission in a Form C filed with the US Court of Appeals for the Second Circuit.
On October 25, Ripple’s chief legal officer, Stuart Alderoty, verified the filing in an X post. He stated, “The SEC can’t submit new evidence or ask [Ripple] to produce more.

The complaint was brought after the US District Court for the Southern District of New York ruled in August that Ripple was fined $125 million for selling XRP to institutions as the sales were considered securities transactions.

The district court ruled that Ripple’s institutional sales of XRP to accredited investors were securities transactions, but the appeal contests this ruling.  The court’s use of the Howey test, a legal criterion to determine whether a transaction counts as an investment contract, is particularly contested in the appeal.

In its Form C petition, Ripple requests a de novo review of the case and establishes the legal foundation for its appeal. With a de novo review, the appeals court can revisit the district court’s legal interpretations without relying on its earlier findings.

The SEC’s tactic of “distraction and confusion for Ripple and the industry” is “just background noise now,” according to Alderoty, who had shown optimism in his X post.

In July 2023, District Judge Analisa Torres found that while Ripple’s institutional sales of XRP constituted an unregistered securities offering, the retail sales did not satisfy the Howey test’s requirements for a “security.”