Ripple files countersuit against SEC ruling

San Francisco-based crypto payment company Ripple has formally filed a cross-appeal with the U.S. Securities and Exchange Commission to ensure that "no wiggle room is left."

Ripple filed its interlocutory notice yesterday in the U.S. District Court in New York, seeking review of the final judgment rendered by that court on August 7, 2024.

Notably, prominent defense attorney James K. Phelan shared this development in an article yesterday.

The company’s cross-appeal notice was filed a week after the SEC formally appealed the Ripple decision.

Ripple Judgment Brief Summary
Remember, the SEC and Ripple each achieved partial victories in the brief and final judgment, respectively. While the court ruled that Ripple violated securities laws through its institutional sales of XRP, it declared that the company’s programmatic sales and other distributions of the token were not investment contracts.

As a result, the court ordered Ripple to pay a $125 million fine for violating the law through its institutional sales. It also imposed a ban on future institutional sales by Ripple, requiring the company to obtain permission from the SEC before conducting those transactions.

Ripple’s cross-appeal notice shows that the company is unhappy with the court’s decision regarding its XRP-related institutional sales. As a result, the company sought to overturn the decision in the U.S. Court of Appeals.

Ripple wants to leave no room for
Although Ripple has yet to file its formal inter-appeal brief, the company’s chief legal officer Stuart Adleti offered a hint of what crypto enthusiasts should expect.

According to him, the SEC appealed Judge Torres' decision because it failed on all key aspects of the case. However, he said Ripple is working across the board to ensure “no wiggle room” is left.

The company’s appeal will focus on the argument that an investment contract does not exist in the absence of a contractual agreement that clearly sets out the rights and obligations of both parties.

It’s worth noting that this opinion concerns Ripple’s institutional sales of XRP, which Judge Torres declared to be a security.

Potential SEC Appeal Brief
Additionally, Adleti mentioned what people can expect from the SEC’s appellate brief. Ripple’s chief legal officer said the Securities and Exchange Commission has confirmed it will not appeal Judge Torres’ ruling that XRP is not a security.

Furthermore, Adler added that the agency apologized for suggesting in another case that a token itself could be a security, effectively confirming that position as law.

While the SEC likely won’t appeal XRP’s non-security status, Adler believes the regulator could challenge Ripple’s decision to tokenize XRP and distribute other XRP to employees and developers.

It should be remembered that Judge Torres ruled that these transactions were not investment contracts. Last year, the SEC sought an immediate appeal to challenge those decisions, but a judge denied its request.

While Adler expects the SEC to appeal those decisions, he predicts the regulator will lose again. Finally, Ripple’s chief legal officer hinted that the company is looking to the appeals court to put an end to the SEC’s misguided attacks on the crypto industry.

Ripple CEO’s response
Reacting to this development, Ripple CEO Brad Garlinghouse expressed his displeasure with the SEC and its chairman Gary Scherer, saying that the commission should not appeal if it cared about the crypto industry.

However, he noted that the SEC is only concerned with creating confusion rather than providing clarity. Following Ripple’s cross-appeal, Garlinghouse said the company wants to put an end to the SEC’s regulatory enforcement agenda that determines its fate.

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