Ripple files cross appeal in ongoing legal battle with SEC

Ripple has filed a cross-appeal, also known as Form C, which lists issues the company plans to raise in an upcoming cross-appeal against the U.S. Securities and Exchange Commission.

Ripple’s Chief Counsel Stuart Alderoty announced on Form C is a document used to outline the specific grounds on which the company objects. Previous decision of the Southern District of New York court regarding corporate sales.

In the filing, Ripple(XRP) stated that each point of appeal is subject to the “de novo” standard of review, which means the court must reexamine its previous decisions based on how the law was applied.

Ripple’s Form C filing comes just days after the SEC’s previous Form C filing on October 18. The SEC asked the court to reconsider its decision to allow the sale of the XRP token on exchanges, as well as the personal sale of the token by the Ripple CEO. Brad Garlinghouse and co-founder Chris Larsen.

One of the main points of appeal raised by Ripple was the district court’s application of the Howey test to Ripple’s XRP transfers. The company stated that the transfers only involved the investment of money into a partner organization with a reasonable expectation of profit from Ripple’s efforts.

Another point of contention is whether the court took into account Ripple’s lack of fair notice in its decision. The company argued that the SEC’s statements regarding the application of federal securities laws for digital assets and digital currencies were “inconsistent” and “intentionally vague.”

Additionally, Ripple questioned whether an investment contract under Section 5 of the SEC Act of 1933 requires “essential components” in the form of a contract that imposes post-sale obligations on the seller and gives buyers the right to demand and receive profits.

Finally, Ripple raises the issue of whether the list of requirements in Rule 65 of the Federal Rules of Civil Procedure precludes a measure that “will serve no other purpose than to direct the ordered party to comply with the law.”

On cross-appeal, Alderoty commented on X that the focus of the case was whether XRP was a security. Since XRP is not legally classified as a security per se.

Instead, he claims that the SEC is trying to “create distraction and confusion” for Ripple and the broader crypto industry. Moreover, he believes that the hard part of the case is already over, as Ripple will not need to present further evidence or fight over documents.

“The Court of Appeal is reviewing the record that has already been set… and we have a great record. The SEC cannot introduce new evidence or ask us to produce more,” Alderoty said.

Today, Ripple filed a Form C listing the issues we plan to raise in our cross-appeal. A few things to keep in mind as we move forward:

The issue is not whether XRP is a security per se. XRP (along with BTC) is uniquely positioned to have clarity… https://t.co/AmFocAnbPx

— Stuart Alderoty (@s_alderoty) October 25, 2024

Earlier this year, the SEC accused Ripple Labs of orchestrating the unfair sale of $1.3 billion worth of XRP tokens due to the token being classified as an unregistered security. The SEC also claimed that XRP creates profit expectations for investors.

As the case approaches a new phase, both sides are preparing for a lengthy legal dispute that could change the cryptocurrency landscape in the United States.