As a seasoned researcher with a keen interest in blockchain technology and financial regulation, I find myself closely following the developments between Ripple Labs and the SEC. With years of experience under my belt, I can attest to the intricacies and nuances that often characterize such legal battles.
As a crypto investor, I’m excited to share that Ripple Labs, the company behind the cryptocurrency XRP, has taken a stand against a recent decision by the U.S. Securities and Exchange Commission (SEC). They have filed an appeal in the United States Court of Appeals for the Second Circuit, challenging the SEC’s ruling. This move signals their commitment to clarify the status of XRP as a digital asset, not a security, in the eyes of the law.
In a post on October 25th, Ripple’s top legal advisor, Stuart Alderoty, verified the submission and stated that the Securities and Exchange Commission (SEC) is unable to introduce fresh evidence or demand additional materials from Ripple.
The submission is made in accordance with a court verdict from the U.S. District Court for the Southern District of New York in August, which levied a $125 million penalty on Ripple due to its institutional sales of XRP (XRP), determining that these sales were indeed securities transactions.
Contesting institutional sales ruling
In a different phrasing, Ripple is challenging the ruling by the district court that deemed their direct sales of XRP to accredited investors as transactions involving securities.
The appeal specifically contests the court’s application of the Howey test, a legal standard used to determine whether a transaction qualifies as an investment contract.
The argument put forth challenges the court’s use of the Howey Test, which is a benchmark for deciding if a given transaction falls under the category of an investment contract.
Legal strategy and appeal process
As an analyst, I’m reporting that Ripple’s recent Form C filing sets the stage for their legal recourse by petitioning for a fresh, comprehensive evaluation, or in simpler terms, a new examination, of their case.
In a de novo review, the appellate court has the opportunity to independently evaluate and reconsider the legal decisions made by the lower court, not bound by their earlier rulings.
In a recent post on X, Alderoty conveyed an upbeat outlook regarding the appeal’s outcome. He characterized the SEC’s tactic of creating distractions and confusion within Ripple and the broader industry as “merely white noise” at this point.
SEC filing against Ripple
In response to the Securities and Exchange Commission’s (SEC) October 16th appeal, Ripple has submitted a new document, challenging the district court’s ruling that partially favored Ripple in the original case.
In contrast, the SEC’s appeal didn’t challenge the decision that XRP wasn’t classified as a security for automated transactions on cryptocurrency trading platforms. Rather, it aimed to have the court’s interpretation of securities legislation in large-scale sales reconsidered.
In July 2023, Judge Analisa Torres of the US District Court for the Southern District of New York made a partial decision favoring Ripple Labs, determining that when XRP is sold automatically through digital asset exchanges, it does not qualify as a security.
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2024-10-25 12:48