SEC to Appeal US Court Ruling on Ripple Lawsuit

The U.S. Securities and Exchange Commission (SEC) is set to file an appeal against a recent U.S. court decision that ruled Ripple's XRP token is not a security in certain instances.

SEC to Appeal US Court Ruling on Ripple Lawsuit

In a filing submitted to the court on August 9 (U.S. time), representatives of the U.S. Securities and Exchange Commission (SEC) announced their intention to appeal the previous ruling concerning the lawsuit between the agency and Ripple, the issuer of the XRP token.

As reported by Coin68, on July 13, the presiding judge in the SEC's lawsuit alleging Ripple's sale of $1.3 billion in securities in the form of XRP ruled that XRP is not considered a security in all cases. Specifically, the court held that XRP qualifies as a security only in transactions between Ripple and investment entities, not in sales of XRP to individual investors through exchange order books.

• Details: Judge declares Ripple's XRP sales agreement not an investment contract

While this declaration only affirms that XRP is not a security in certain specific contexts, it represents a significant legal victory in the case, which has spanned into its third year. This ruling prompted a nearly 100% surge in the value of the token on that day. Moreover, it sets a legal precedent for other crypto projects facing SEC allegations of being securities to bolster their defenses. Subsequently, many crypto exchanges swiftly relisted XRP.

SEC representatives also referenced another lawsuit between the agency and Terraform Labs, the entity behind two crypto projects that collapsed in May 2022, LUNA and UST. The judge in this case rejected Ripple's court's view, affirming that the manner of sale cannot determine whether an asset qualifies as a security.

Ripple will have until August 16 to comment on the SEC's appeal plan before the SEC formally submits its appeal on August 18.

SEC Chairman Gary Gensler expressed "disappointment" with the court's ruling back in July but hinted at the possibility of an appeal at that time.

The price of XRP reacted negatively to the latest developments in the SEC lawsuit, dropping slightly from $0.66 to $0.63 upon news of the SEC's appeal of the court ruling.

15-minute chart of the XRP/USDT pair on Binance as of 07:40 AM on August 10, 2023

In related developments, a U.S. court judge has scheduled a trial date to determine whether Ripple's co-founders, Chris Larsen and CEO Brad Garlinghouse, violated securities laws by selling XRP securities. The trial is set to take place in the second quarter of 2024. Both the SEC and Ripple have until December 2023 to submit evidence for the lawsuit, as well as to request the dismissal of each other's evidence.