Ripple CLO Breaks Down Next Steps In US SEC vs XRP

Stuart Alderoty has shared the developments of next steps that are to be taken in the ongoing lawsuit between Ripple and the United States Securities and Exchange Commission (SEC).

Ripple Chief Legal Officer (CLO) Stuart Alderoty provided an update on the next steps in the ongoing legal battle between Ripple and the United States Securities and Exchange Commission (SEC).

The case, filed in 2020, centers on whether XRP is classified as a security and if Ripple conducted sales of the token without registering them under U.S. law. As the legal fight advances to the appeals stage, both Ripple and the SEC prepare for a prolonged process that could extend into 2026.

At the agency's annual Swell conference, Alderoty outlined the next stages of the appeal, detailing the basis of the SEC's appeal and Ripple's cross-appeal.

According to Alderoty, the SEC must file Form C, indicating the specific claims it intends to pursue, by October 16, 2024. Following this, Ripple will file its own Form C, presenting the company's cross-appeal, within two weeks.

The company has stated that its cross-appeal will challenge specific provisions of the original decision, which found that certain institutional XRP sales constituted unregistered securities transactions.

After submitting Form Cs, the parties will schedule the filing of legal briefs. The SEC is expected to submit its first brief within 90 days, presenting its legal arguments.

According to Alderoty, the SEC is likely to utilize the full 90 days, which would result in the first brief submission by mid-January 2025. Subsequently, Ripple will file its response, followed by its own brief. This process, involving multiple cycles of briefing and reply, is anticipated to continue through mid-2025.

Despite the extended time frame, Alderoty expressed optimism regarding the company's strong legal position. In his speech at the Swell conference and other interviews, he stated that Ripple is even more confident in its position at the U.S. Court of Appeals for the Second Circuit than it was in the Southern District of New York.

“We think this appeal will blow up in the SEC's face,” said Alderoty, highlighting that the majority of appeals in the Second Circuit do not lead to reversals of the district court's decisions, but rather affirmations of such decisions.

He noted that the SEC's attempt to seek clarification through this appeal could positively impact the entire cryptocurrency space by setting a legal precedent.

Ripple's cross-appeal will focus on the portion of Judge Analisa Torres' judgment that found institutional sales of XRP by the company violated securities laws.

While Judge Torres ruled that retail sales of XRP did not constitute unregistered securities offerings, she ruled against Ripple on institutional sales.

The company will argue that these institutional sales did not involve “investment contracts” because they lacked specific rights and obligations, a key legal factor in determining whether a financial product is a security under U.S. law.

According to Alderoty, the company is aiming for a legal precedent that clarifies this distinction. “We think that's a fundamental rule of law that needs to be recognized,” he said, adding that trial courts have been hesitant to go that far in their interpretations. However, the Ripple CLO acknowledged that the Second Circuit's ruling could bring much-needed clarity, regardless of which side ultimately prevails.

In addition to its ongoing legal battle with the SEC, the company continues to expand its operations globally. At the Swell event, the company also discussed the upcoming launch of its new stablecoin, RLUSD, a dollar-denominated token designed to enable faster and cheaper cross-border payments.

The stablecoin is set to be issued under New York's strict regulatory framework, which could give it an advantage in regulatory compliance, especially in an environment where other stablecoins face increased scrutiny.

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