SEC Appeal in Ripple Case: Stalemate or a Path to Reconsideration?
The legal battle between the SEC and Ripple continues to escalate. On January 15, both parties filed a joint statement confirming that counter-appeals would be submitted 21 days after the defendant filed its main brief. Despite these procedural steps, the case seems to have reached a stalemate.
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A critical date in the case is January 16, the deadline for the SEC to file its opening appeal brief.
In July 2023, District Judge Analisa Torres ruled that XRP qualifies as a security only when sold to institutional investors, exempting retail transactions from this classification. The SEC has criticized the ruling, insisting that even retail sales of XRP should be considered unregistered securities.
The SEC argues that all XRP buyers, without exception, are expected to profit from Ripple’s promotional efforts, thereby classifying XRP as an investment contract under the Howey Test. However, the court ruled that retail investors had no direct connection to Ripple, placing their purchases outside the scope of securities laws.
The dispute intensified in October 2023 when the SEC filed an appeal, seeking to overturn the decision and classify retail XRP sales as securities. Despite this push, many legal experts and industry observers have expressed doubts about the effectiveness of the SEC’s approach.
Legal expert Bill Morgan described the situation as highly contentious. While he anticipates the SEC will continue pursuing its appeal, he noted that a change in the agency’s leadership could lead to a shift in strategy.
The ongoing dispute centers around SEC Chair Gary Gensler, whose hardline stance on the cryptocurrency sector has drawn significant criticism in recent years. Many in the industry believe his resignation could be the key to breaking the stalemate. Former SEC attorney Mark Feigel suggested that abandoning the appeal could pave the way for a more constructive dialogue between the regulator and XRP’s issuer.
Ripple CEO Brad Garlinghouse took a sharper tone, stating that the Commission, with a stubbornness that could be better directed elsewhere, continues to repeat the same actions while expecting different results.
For now, the conflict shows no signs of resolution. However, it’s increasingly clear that only a fundamental shift in the SEC’s regulatory approach—potentially alongside a leadership change—can bring meaningful progress.
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