XRP Takes 10% Hit After SEC Files Appeal in Ripple Lawsuit

Crypto Reporter

Shalini Nagarajan

Crypto Reporter

Shalini Nagarajan

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Shalini is a crypto reporter who provides in-depth reports on daily developments and regulatory shifts in the cryptocurrency sector.

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Last updated:

October 2, 2024 23:59 EDT

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XRP’s value dropped over 10% on Thursday after the SEC filed an appeal against the court’s decision in its lawsuit against Ripple. This follows Judge Analisa Torres’s final ruling on Aug. 7, imposing a $125m penalty on Ripple, far less than the SEC’s initial $2b demand.

The court ruled that Ripple’s XRP sales to institutional investors were securities transactions, resulting in the penalty. However, Judge Torres said that these sales were neither fraudulent nor malicious, with no fraud claims or financial harm shown.

Further, the ruling clarified that while certain XRP transactions are considered securities, XRP itself is not inherently a security, providing key regulatory guidance for Ripple and the broader industry.

SEC Appeal Aims for XRP to Be Classified as Security Across All Transactions

The SEC appealed to the Second Circuit Court of Appeals, indicating its intent to challenge the ruling on several grounds. Central to the SEC’s appeal is its belief that the district court’s decision conflicts with long-standing Supreme Court precedents and established securities laws.

According to the SEC, XRP should be classified as a security in all sales, whether institutional or retail. It argues that XRP’s classification shouldn’t differ based on the transaction type.

Ripple’s CLO Says SEC Appeal is ‘Embarrassing’

Ripple’s chief legal officer Stuart Alderoty said on X that the SEC’s appeal was “disappointing, but not surprising.”

“This just prolongs what’s already a complete embarrassment for the agency. The Court already rejected the SEC’s suggestion that Ripple acted recklessly, and there were no allegations of fraud and, of course, there were no victims or losses,” he said.

Meanwhile, Ripple CEO Brad Garlinghouse said the company is prepared to defend its position in court for as long as necessary.

“Let’s be clear: XRP’s status as a non-security is the law of the land today – and that does not change even in the face of this misguided – and infuriating – appeal,” he said.

Garlinghouse discussed the lawsuit last month at KBW2024 in Seoul, South Korea. He said he was uncertain about whether the SEC would appeal, yet he maintained that there was no viable way for the regulator to overturn the fundamental decision that “XRP is not, in and of itself, a security.”