SEC appeals Ripple ruling as XRP maintains surge

The appeal filed by the US Securities and Exchange Commission (SEC) in the ongoing Ripple case challenges a court ruling from July 2023 that partially dismissed claims against Ripple. This appeal comes after the SEC issued an initial notice to appeal Judge Analisa Torres’s August ruling, which fined Ripple $125 million. Ripple’s CEO, Garlinghouse, hailed Torres’s ruling as a triumph for the company. The initial $1 billion disgorgement and prejudgment interest, along with a $900 million civil penalty that the SEC sought, were significantly reduced to the $125 million penalty. The ruling also included an injunction against future securities law violations by Ripple.

Judge Torres’s order stipulated that Ripple pay $125 million in civil penalties and refrain from future securities law violations. The judgment was based on the finding that 1,278 institutional sale transactions by Ripple violated securities law. However, the SEC, in its latest filing, aims to overturn the district court’s decision. The agency challenges the court’s exclusion of non-cash XRP distributions, like those used for employee compensation and business incentives, from securities regulations, arguing that they meet the “investment of money” requirement under the Howey framework.

Ripple’s Chief Legal Officer, Stuart Alderoty, responded to the appeal by stating that it was expected and labeled it as mere “noise.” He expressed confidence that the lawsuit was on shaky ground and likely to be abandoned by the incoming administration. Alderoty emphasized that the SEC’s lawsuit was insignificant in the face of the forthcoming pro-innovation regulatory landscape, asserting that Ripple was flourishing amidst the legal challenges.

The outcome of the SEC’s appeal could have significant implications for future enforcement actions by the agency. A ruling in the SEC’s favor might embolden them to pursue similar cases, while a defeat could curtail their regulatory authority. However, a resolution in the appeals court is not anticipated until later in the year, causing continued uncertainty within the crypto industry.

Despite the legal challenges, XRP continues to surge in value. Having increased by 7.8% over the past 24 hours, XRP is now the third-largest cryptocurrency by market capitalization, having gained 29% over the week and an impressive 426% over the year. This upward trend highlights the resilience of XRP in the face of regulatory battles.

In a broader context, the cryptocurrency market has seen significant fluctuations, with Bitcoin’s rally above $100K losing momentum. In contrast, XRP has soared by 400%, attributed to factors such as Trump, ETFs, and a shifting regulatory landscape at the SEC. This surge in XRP’s value underscores the market’s response to external factors and regulatory uncertainties, shaping its trajectory in the crypto landscape.