SEC Appeals Ripple Ruling, XRP Price Drops Amid Legal Uncertainty

The U.S. Securities and Exchange Commission (SEC) has filed a notice of appeal in its ongoing lawsuit against Ripple Labs, challenging a previous court ruling that found XRP is not inherently a security. The appeal, filed on October 2, 2024, seeks to overturn key aspects of Judge Analisa Torres’ July 2023 decision that partially favored Ripple.

In her original ruling, Judge Torres determined that programmatic sales of XRP on secondary markets did not constitute securities transactions. However, she also found that Ripple’s sales to institutional investors did violate securities laws. The SEC’s appeal could potentially target either or both of these findings.

Ripple Considers Cross-Appeal as XRP Price Tumbles

Ripple’s Chief Legal Officer, Stuart Alderoty, expressed disappointment with the SEC’s decision to continue litigation. In a statement, Alderoty said, “This case has been a complete embarrassment for the SEC from the start.” He noted that Ripple is considering filing a cross-appeal by October 18, potentially challenging the institutional sales ruling or the $125 million penalty imposed in August.

The legal uncertainty has impacted XRP’s market performance. Following the SEC’s appeal notice, XRP’s price dropped approximately 11%, trading at $0.5331 at press time.

Institutional Interest Grows Despite Legal Challenges

Interestingly, the appeal comes amid signs of growing institutional interest in XRP. Bitwise recently filed for an XRP ETF trust in Delaware, though SEC approval may now be delayed due to the ongoing legal battle.

In a related development, SEC enforcement chief Gurbir Grewal announced his resignation just hours before the appeal was filed. This personnel change has raised questions about the agency’s approach to crypto regulation going forward.

As the case moves to the U.S. Court of Appeals for the Second Circuit, the crypto industry will be watching closely. The outcome could have far-reaching implications for how digital assets are classified and regulated in the United States.

Ripple CEO Brad Garlinghouse remains defiant, stating, “XRP’s status as a non-security for programmatic sales remains unchanged despite the SEC’s appeal.” He criticized the agency for “squandering taxpayer funds on a losing fight.”