SEC Likely to Appeal Ripple Ruling on XRP Sales, Former SEC Lawyer Says

Highlights:

• A former SEC lawyer indicates the agency is likely to appeal the Ripple ruling on XRP programmatic sales.
• The SEC disagrees with Judge Torres’s decision that XRP sales to retail investors are not securities transactions.
• Legal experts argue the SEC’s appeal could create uncertainty in the crypto industry, impacting XRP and investors.

A former Securities and Exchange Commission (SEC) lawyer has indicated that the agency is likely to appeal Judge Analisa Torres’s ruling on Ripple’s XRP programmatic sales. With the October 7 deadline approaching, speculation intensifies about the SEC’s next move in its case against Ripple Labs.

The former SEC attorney Eleanor Terrett stated, “Everyone over there truly believes that the decision is wrong, that it’s not good law, and should be appealed.” This insight suggests that the SEC is preparing to challenge the July 2023 ruling, which favored Ripple in significant aspects.

🚨NEW: A former @SECGov lawyer who recently left the agency tells me the SEC will ‘probably’ appeal Judge Torres’s July 2023 ruling concerning the $XRP programmatic sales in the @Ripple case partly because: “everyone over there [at the SEC] truly believes that the decision is…

— Eleanor Terrett (@EleanorTerrett) September 26, 2024

Ripple secured a partial victory when Judge Torres ruled that XRP sales to retail investors on exchanges did not violate U.S. securities laws. However, she determined that Ripple’s direct sales to institutional investors did breach securities regulations. The SEC was ordered to pay a fine of $125 million, a significant reduction from the $2 billion initially sought.

Legal Community Reacts to Potential Appeal

Attorney Jeremy Hogan commented on Terrett’s report, emphasizing that the SEC’s belief in the ruling’s incorrectness is expected since it was on the losing side. However, he questioned whether an appeal aligns with the SEC’s mandate of investor protection and capital formation. Hogan stated, “Why isn’t that top of mind? More evidence the SEC has lost the plot.”

Of COURSE they think the opinion is wrong – they were on the losing side.

What the SEC SHOULD be thinking of right now is whether an appeal furthers its mandate of investor protection and capital formation. Why isnt that top of mind?

More evidence the SEC has lost the plot.

— Jeremy Hogan (@attorneyjeremy1) September 26, 2024

Another lawyer, Fred Rispoli, suggested that even if the SEC appeals, a court ruling might not occur until 2026. He added that the agency’s recent actions against various exchanges and tokens have lessened the severity of its claims against Ripple.

The Chief Legal Officer at Ripple, Stuart Alderoty, expressed confidence in the ruling. In August, he mentioned that the lawsuit was over and highlighted the court’s rejection of the SEC’s overreach. Alderoty said that the possibility of an appeal was low, signaling optimism about the case’s finality.

Impact on XRP and the Crypto Industry

The potential SEC appeal could create uncertainty in the cryptocurrency market, particularly affecting XRP investors. The initial ruling led to a surge in XRP’s price, as the crypto community viewed it as a significant win for Ripple. An appeal might reverse this sentiment, causing concerns among investors about prolonged legal battles.

Legal experts have noted that the SEC’s inconsistent stance on cryptocurrencies adds to the confusion. While SEC Chair Gary Gensler has labeled Bitcoin as a commodity, the status of other digital assets remains unclear. The agency’s possible appeal in the Ripple ruling could further muddle the regulatory landscape.

Critics argue that the SEC should focus on providing clear guidelines rather than pursuing extended litigation. An investigative journalist commented that the SEC might appeal not because Ripple was wrong but because the agency dislikes the ruling. This perspective suggests that the SEC’s actions may hinder innovation in the U.S. cryptocurrency industry.

If the SEC believes the ruling on programmatic sales is wrong, they should appeal. The secondary market often involves less sophisticated investors who need the most protection.

The real question is whether the ruling was truly incorrect, or if the SEC simply doesn’t like the…

— Jungle Inc Crypto News (@jungleincxrp) September 27, 2024

As the October 7 deadline nears, all eyes are on the SEC to see if it will proceed with an appeal. The agency’s decision could have far-reaching implications for Ripple and the broader crypto market. If the SEC appeals the Ripple ruling, it may prolong the legal process, potentially extending it to 2026. Moreover, Eleanor Terrett noted that she plans to delve deeper into the SEC’s options as the deadline nears.