Ripple files Form C in SEC case, highlighting 4 key issues: Details

Ripple Labs has stepped up its legal battle with the US Securities and Exchange Commission (SEC) after filing its civil pre-appeal statement, also known as Form C.

The filing comes just days after the SEC filed a last-minute appeal against several parts of a 2023 ruling that found Ripple’s programmatic sales of its native XRP token to retail investors did not violate the laws of US securities.

Main points of contention

In its statement shared to X by attorney James K. Filan, the crypto-payments company laid out four key issues for the Second Circuit Court of Appeals to consider.

The first concerns whether an “investment agreement” under the Securities Act of 1933 must include a formal agreement, post-sale obligations, and the right of buyers to receive profits from sellers. This definition could reshape the understanding of digital asset transactions.

Ripple’s second point is to challenge the lower court’s decision that its XRP transfers met the criteria set out in SEC vs WJ Howey Co. This case, which gave rise to the Howey test, defined the conditions under which something is considered an investment contract.

Ripple argues that its transactions did not represent an investment of money in a common enterprise with profits expected solely from the efforts of the enterprise.

The San Francisco-based company also raised a third important question about “fair notice.” He claims he gave potential buyers of XRP a lot of evidence that shows the uncertainty surrounding cryptocurrencies as far as federal laws apply.

This point is key to Ripple’s defense, as it suggests that the SEC and other agencies involved failed in their mandate to provide clear guidance on the legality of the crypto company’s actions.

Ripple’s final question in the filing challenges the clarity required to issue injunctive relief under the Federal Rules of Civil Procedure. He argues that the demand issued to him by Judge Analisa Torres in a ruling where he also imposed a $125 million fine on the company only tells him to comply with the law and lacks the necessary specificity and clarity.

Ripple’s Strategic Perspective

Speaking after the filing, Ripple’s chief legal officer, Stuart Alderoty, insisted that the ongoing case is not about XRP’s broader classification as a security. He noted that, like Bitcoin (BTC), XRP currently enjoys non-security status, which was not challenged by the SEC in its Form C last week.

The lawyer believes this perspective allowed Ripple to focus its appeal on specific legal nuances rather than the global regulatory classification of crypto.

With both parties in the case having submitted their reports, experts say it is now up to the Second Circuit to issue a scheduling order that expedites them.

According to Alderoty, the court will only examine the existing record, meaning it will not allow new evidence to be introduced into the process, a point the lawyer believes could minimize disruptions and speed up the final ruling.

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