SEC Appeals Court Ruling in Ripple Case –Citing Concerns of Limited Crypto Regulation
The Securities and Exchange Commission (SEC) filed an appeal this Wednesday against Judge Analisa Torres' ruling in her case against Ripple
The Securities and Exchange Commission (SEC) filed an appeal this Wednesday against Judge Analisa Torres’ ruling in her case against Ripple Labs, a few hours after its Chief Compliance Officer, Gurbir Grewal, resigned from his position at the agency.
The SEC said this court ruling is restricting its ability to regulate cryptocurrency markets.
The SEC said it is appealing a court ruling that restricted its ability to regulate cryptocurrency markets https://t.co/tqftV5hDnb pic.twitter.com/mTSznQYCdg
— Reuters Legal (@ReutersLegal) October 2, 2024
Grewal, who has led the unit since July 2021, filed more than 100 enforcement actions against companies in the crypto space, including lawsuits against Binance and Coinbase.
He also oversaw sanctions worth $20 billion in 2,400 actions taken. He will leave office on October 11. He will be transiently replaced by Sanjay Wadhwa, who is presently performing as Deputy Director of the Division.
The SEC is asking the US Court of Appeals for the Second Circuit to review a July 2023 ruling, which found that Ripple Labs’ XRP token sold on public exchanges does not meet the legal definition of security, limiting the SEC’s regulatory authority over XRP.
The decision by US District Judge Analisa Torres meant that sales of the token, totalling around $757 million, were not subject to investor protection laws enforced by the SEC.
However, the SEC won a partial victory: the court ruled that $728 million in institutional XRP sales are subject to securities laws.
Last August, Judge Torres charged a fine of $125 million against Ripple, well below the nearly $2 billion the SEC asked for projection, prejudice interest, and civil fines.
The judge stayed enforcement of this fine until the SEC’s deadline for filing an appeal had passed or until the circuit court had ruled on the appeal.
The court issued a permanent injunction against Ripple, preventing future violations of securities laws related to XRP sales, but found no evidence of fraud or misconduct.
XRP price fell following the news of the SEC appeal and was trading at $0.53 at the time of writing, a drop of over 11.16% in the last 24 hours.
“If Gensler and the SEC were rational, they would have put this case behind them a long time ago. It certainly has not protected investors and has instead damaged the credibility and reputation of the SEC,” Ripple CEO Brad Garlinghouse said in a post on X. Alderoty called the appeal “disappointing, but not amazing”.
Im not surprised. Im pissed.
Im pissed that the SEC is spending OUR (taxpayer) money on a losing battle
Im pissed that they are able to act without recourse or consequenceRegardless, WE WILL PREVAIL! For Ripple, for the XRP Army and the crypto industry
— Brad Garlinghouse (@bgarlinghouse) October 2, 2024
Additionally, “While we will fight in court for as long as we need, let’s be clear: XRP’s status as a non-security is the law of the land today,” Ripple CEO Brad Garlinghouse added in a post on X.
The SEC appeal has major implications for crypto exchanges like Coinbase. The SEC’s limited oversight could lead to unpredictable price swings. Less clarity would affect investor confidence and market stability.
As this legal battle progresses, its impact extends beyond Ripple and XRP. The case could serve as a benchmark for future regulatory approaches both in the United States and internationally.
The outcome of the appeal could tighten regulation or open up a crypto landscape with fewer restrictions, shaping how governments globally handle digital currencies.
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