SEC’s Ripple Appeal Targets Sales, Not XRP Non-Security Status

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The U.S. Securities and Exchange Commission (SEC) has filed an appeal in its ongoing legal battle against Ripple Labs. The appeal challenges aspects of the court’s previous sales ruling but notably leaves XRP’s non-security status untouched.

This marks yet another chapter in the high-profile case, with the SEC focusing its appeal on Ripple’s sales practices and the involvement of its executives rather than the overall classification of XRP as a non-security.

In July 2023, U.S. District Judge Analisa Torres ruled in favor of Ripple, determining that sales of XRP to retail investors on digital asset platforms were not securities transactions under U.S. law.

However, the court found that Ripple’s institutional sales of XRP did breach securities regulations, resulting in a $125 million penalty against Ripple for unregistered securities offerings.

The SEC’s appeal, filed on October 17, 2024, does not contest the ruling regarding XRP’s retail sales, which remains intact.

Instead, the SEC targets specific aspects of Ripple’s operations, focusing on programmatic sales of XRP on digital platforms, sales by Ripple’s executives, Brad Garlinghouse and Chris Larsen, and distributions of XRP in exchange for services rather than cash.

According to the appeal filing, the SEC seeks to review these “de novo” issues, meaning the appellate court will examine the legal questions from scratch without deference to the trial court’s judgment.

The SEC believes that the district court “erroneously” ruled in favor of Ripple on these points and wants the U.S.