Ripple has swiftly responded to the Securities and Exchange Commission’s (SEC) appeal by filing a cross-appeal. This recent filing follows Ripple executives’ commitment to fully defend the company. While the SEC’s appeal focuses on Ripple’s XRP sales and founder transactions, Ripple’s cross-appeal brings forward key issues it wants reconsidered.
Key Points in Ripple’s Cross-Appeal
Ripple’s Form C lists four major issues for court reconsideration. First, Ripple challenges whether an investment contract must be legally binding. While this doesn’t eliminate the $125 million judgment against Ripple, attorney Jeremy Hogan argues it could significantly impact the broader crypto sector.
He suggests a favorable ruling on this issue could weaken the SEC’s enforcement power. The second issue addresses the classification of XRP institutional sales as securities. By appealing this, Ripple seeks to question the foundational principles of the Howey test, a longstanding legal standard for determining securities.
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Ripple also revives its fair notice defense, claiming it lacked clarity that its actions violated the law. With this defense, Ripple shifts the burden of proof back onto the SEC, challenging the agency’s basis for enforcement. Lastly, Ripple contests the validity of the injunction, asserting that the SEC’s general instruction to “follow the law” lacks clarity. Ripple argues the vague guidance undermines the injunction, making it legally questionable.
Ripple’s Confidence in Its Appeal
Ripple’s leadership remains confident in their position. CEO Brad Garlinghouse expressed optimism, believing a successful appeal could undercut SEC Chair Gary Gensler’s agenda on crypto regulation. Chief Legal Officer Stuart Alderoty reminded the crypto community that the SEC did not contest the court’s earlier ruling that XRP is not a security.
Related article: Ripple CEO Blasts SEC Over Appeal Against XRP Legal Victory
He believes the hardest part is over, with the SEC facing limited chances of success in the Second Circuit. Adding to this sentiment, the SEC’s recent request to extend the deadline for its principal brief to January 15, 2025, has stirred questions about its confidence in the case.
Ripple’s appeal underscores its intent to weaken the SEC’s case and establish a stronger legal stance within the crypto industry.