Ripple CLO: SEC’s Missteps Exposed Through Cross-Appeal

Ripple has taken another step in its legal battle against the U.S. Securities and Exchange Commission (SEC), filing a cross-appeal after the final judgment by Judge Torres. This judgment, entered on August 7, 2024, has led Ripple to appeal key points in the ongoing case.

Ripple Leaders Included in Cross-Appeal Notice

The cross-appeal, filed on October 10, 2024, includes Ripple CEO Brad Garlinghouse and Chairman Chris Larsen as defendants. Earlier in October, the SEC also filed its own appeal, requesting that Ripple pay a $125 million civil penalty for its XRP sales. This amount is a small portion of the $2 billion initially sought by the SEC.

Ripple CEO Brad Garlinghouse has expressed confidence in the company’s decision to cross-appeal. In a tweet, Garlinghouse stated that the move would further damage the SEC’s legal standing. He emphasized Ripple’s strong position, noting the company’s leadership in its previous court victory and its determination to win again. Garlinghouse sees this as an opportunity to put an end to the SEC’s “regulation-by-enforcement” approach.

Ripple’s Legal Strategy: No Contract, No Security

Ripple’s Chief Legal Officer (CLO), Stuart Alderoty, shared further insights into the company’s strategy. He explained that Ripple filed the cross-appeal to ensure all potential issues are addressed, particularly the argument that without essential rights and obligations in a contract, there can be no “investment contract.”

The SEC lost on all key points—that’s why they appealed. Today, Ripple filed a cross-appeal to ensure nothing’s left on the table, including the argument that there can’t be an "investment contract" without there being essential rights and obligations found in a contract.
— Stuart Alderoty (@s_alderoty) October 10, 2024

Alderoty also pointed out that the SEC had previously agreed not to appeal the ruling that XRP is not a security. He reminded that the SEC even apologized in a separate case for suggesting a token itself could be classified as a security. “That’s the law, and nothing in the SEC’s appeal changes that,” Alderoty added.

Alderoty anticipates the SEC will attempt to revisit prior rulings, including those stating that Ripple’s XRP sales and other distributions were not securities. However, he is confident that the SEC will lose again.

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He expressed optimism about the Federal Court of Appeals putting a definitive end to SEC Chair Gary Gensler’s “misguided attack” on the cryptocurrency industry.

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