Ripple Labs has risen to the challenge the SEC in the US Court of Appeals for the Second Circuit, filed a Form C cross-appeal to challenge key aspects of the SEC’s case. This filing not only contradicts a previous ruling that classified certain XRP transactions for institutional investors as securities but also directly responds to the SEC’s October 16 complaint that questioned the district court’s ruling in favor of Ripple earlier this year.
Ripple’s Legal Refusal to File Form C
Ripple’s Form C filing The appeal has sparked interest among the legal and cryptocurrency communities, with Ripple Chief Legal Officer Stuart Alderoty confirming the move by mail to X. According to him, the case will not bring as much drama as the previous parts of the case. . The Court of Appeals will only review the established record, and the SEC cannot submit new evidence or ask Ripple to produce more.
Today, Ripple filed a Form C – listing the issues we plan to disclose in our cross-petition. A few things to keep in mind as we move forward:
The case is not that XRP, in itself, is a security. XRP is uniquely positioned as transparent (compared to BTC) by not…
— Stuart Alderoty (@s_alderoty) October 25, 2024
The appeal requires a de novo review of all issues involved in the case, including whether Ripple’s transfer of XRP qualifies as securities under the Howey test. The Howey test, established in a 1946 Supreme Court case, determines whether a transaction constitutes an investment contract by examining factors such as the investment and the expectation of profit from the seller’s activities.
A request for a de novo review can have important implications, as we actually want a new look at these complex issues and how they can be applied to cryptocurrencies and other aspects of the industry.
Challenging the SEC’s Position on Cryptocurrency Regulation
Ripple’s Form C filing also aims to address what it describes as vague and inconsistent statements from the SEC regarding the application of securities laws to digital assets. The SEC has long argued that XRP trading is a hedgewhich requires Ripple to comply with federal securities laws. However, Ripple’s recent form C filing highlights the lack of regulatory clarity that has left the crypto industry uncertain about compliance with SEC standards.
Based on the applications of the Howey test, the court ruled that sales of XRP to the general public were not securities. However, it also ruled that sales of XRP to institutional investors in its early days were classified as unregistered securities offerings, ordering Ripple to pay a $125 million civil fine.
By requesting de novo review and application of the Howey test, Ripple it aims to overthrow 125 million dollars were asked to pay.
The outcome of this appeal could have far-reaching consequences for the broader cryptocurrency industry. If the court sides with Ripple, the ruling could serve as a precedent for future cases, potentially setting new limits on the SEC’s crackdown on the crypto industry. A ruling in favor of the SEC could strengthen the regulator’s ability to enforce securities laws in the industry.
Featured image from Fox Business, chart from TradingView