The U.S. Securities and Exchange Commission (SEC) has officially filed an appeal in its ongoing lawsuit against Ripple Labs, seeking to challenge a prior ruling that favored Ripple. The appeal, filed on October 2, 2024, aims to overturn Judge Analisa Torres’ 2023 decision that declared secondary sales of XRP do not qualify as securities transactions.
Ripple’s 2023 Victory and SEC’s Appeal
The lawsuit, originally filed by the SEC in December 2020, accused Ripple and its founders of conducting unregistered securities sales via XRP. However, in July 2023, Judge Torres ruled that XRP itself is not a security. She based her decision on the Howey Test, which is used to determine whether a financial asset qualifies as an investment contract. According to the ruling, XRP did not meet all the necessary conditions, particularly in secondary market sales, and thus could not be classified as a security.
Judge Torres’ ruling marked a significant victory for Ripple and the broader cryptocurrency industry, as it set a precedent regarding the regulatory classification of digital assets. The court did, however, find that early XRP sales to institutional investors constituted securities transactions, since they were conducted in a manner that aligned with securities laws.
The SEC’s Ongoing Fight
Legal experts had widely expected the SEC to appeal the decision, given its long-standing stance that XRP—and many other cryptocurrencies—should be treated as securities. By filing this appeal, the SEC hopes to reverse the favorable ruling for Ripple, which could reshape the regulatory landscape for digital assets moving forward.
The appeal will likely prolong the legal battle, potentially delaying a final resolution on the status of XRP for years. The case remains pivotal, as its outcome could have widespread implications for how cryptocurrencies are regulated in the U.S.
