Ripple Labs, a blockchain payments company, plans to continue its legal battle with the U.S. Securities and Exchange Commission (SEC) in a lawsuit centred around the classification of XRP, a digital token, as a security and whether the company conducted unregistered sales of it. The legal dispute could extend into 2026 as the case moves into the appeals stage.
Ripple Chief Legal Officer (CLO) Stuart Alderoty has detailed the future steps in the appeal process, explaining the agency’s appeal and Ripple’s cross-appeal. Alderoty stated that the SEC needs to file Form C, outlining what it intends to prosecute, by October 16, 2024. Ripple plans to challenge the specific provisions of the decision that classified certain institutional XRP sales as unregistered securities transactions when it files its own Form C.
Alderoty was optimistic about the company’s case, stating that Ripple is confident in its position in the U.S. Court of Appeals for the Second Circuit. He said that the appeals in the Second Circuit seldom lead to reversals of district court decisions but often affirm them, thus Ripple is confident.
The cross-appeal of Ripple will focus on the part of Judge Analisa Torres’ decision that found institutional sales of XRP were a violation of securities laws. While the judge ruled that retail sales of XRP did not constitute unregistered securities offerings, she ruled against Ripple on institutional sales. The company will argue that these institutional sales were not “investment contracts” since they lacked specific rights and obligations, which are key factors in determining whether a financial product is a security under U.S. law.
Alderoty indicated that the company aims for a legal precedent that clarifies this distinction. He stated that the distinction between retail and institutional XRP sales is a fundamental rule of law that should be recognized. The Second Circuit’s ruling could provide much-needed clarity in the cryptocurrency market, regardless of which side prevails in the case.
