Ripple Labs Files Cross-Appeal as Battle With SEC Rages On

Fintech company Ripple Labs moved Thursday to cross-appeal a federal judge’s decision in its years-long legal battle with the Securities and Exchange Commission (SEC) over XRP sales.

In a one-sentence filing, Ripple informed the U.S. District Court for the Southern District of New York that the firm would appeal a ruling delivered by U.S. District Judge Analisa Torres in August. The case will move to the U.S. Court of Appeals for the Second Circuit.

Judge Torres ordered the San Francisco-based firm, which the SEC sued in 2020, to pay a $125 million fine over XRP transactions that broke securities laws. At that time, Ripple CEO Brad Garlinghouse declared Torres’ ruling a victory, with a fine far below the SEC’s $2 billion request.

The SEC accused Ripple of violating securities laws several years ago, claiming that the firm had raised $1.3 billion through unregistered securities offerings since 2013. The unregistered security was allegedly XRP, the industry’s seventh biggest cryptocurrency by market cap.

However, Judge Torres ruled last summer that XRP was “not necessarily a security on its face,” finding that the circumstances under which the token was sold were relevant. Programmatic sales to public buyers and distributions of XRP to Ripple Labs employees were fine, she ruled, while $728 million worth of contracts for institutional sales were unregistered securities sales.

The SEC moved to appeal that ruling earlier this month, telling Decrypt that “the district court decision in the Ripple matter conflicts with decades of Supreme Court precedent.”

The price of XRP is up slightly following Ripple’s cross-appeal, rising about 1% over the past day at nearly $0.53. Testing the token’s regulatory status in a different way, the asset manager Bitwise filed for an spot XRP ETF with the state of Delaware earlier this month.

On Twitter (aka X), Ripple Labs’ Chief Legal Officer Stuart Alderoty wrote that the company’s cross-appeal was meant to “ensure nothing’s left on the table.”

As an example, he referenced an argument from crypto advocates that a digital asset cannot be considered an investment contract—and therefore a security, under Supreme Court precedent—without “there being essential rights and obligations found in a contract.”

Alderoty referenced Judge Torres’ previous denial of the SEC’s so-called interlocutory appeal, which effectively prevented the regulator from filing an appeal until Torres’ final judgment.

“Last year, the SEC unsuccessfully tried to take an early appeal of the rulings that Ripple’s XRP sales on exchanges and Ripple’s other XRP distributions [...] weren’t securities,” Alderoty said on Twitter. “They’ll likely go after these again—and they will lose on both again.”

Ripple Labs did not immediately respond to a request for comment from Decrypt.

Edited by Andrew Hayward