Ripple Labs Escalates Legal Battle With the SEC, Submits Form C to the Appeals Court

This filing is a pre-argument statement that requests the appeals court to apply a “de novo” standard—essentially a re-evaluation of the previous Southern District of New York court's decision concerning Ripple's XRP transactions and securities classification.

Ripple Labs filed its Form C with the appeals court on Thursday as part of its ongoing legal battle with the U.S. Securities and Exchange Commission (SEC). This filing is a pre-argument statement that requests the appeals court to apply a “de novo” standard—essentially a re-evaluation of the previous Southern District of New York court’s decision concerning Ripple's XRP transactions and securities classification.

The appeal questions whether the district court's use of the Howey test was appropriate for classifying XRP as an investment contract. Specifically, Ripple argues that its XRP sales to institutions shouldn't be treated as securities transactions, as this would require an “investment of money in a common enterprise with expectations of profit derived solely from the efforts” of Ripple.

Additionally, Ripple challenges the court's decision on “fair notice,” claiming that the SEC's inconsistent and ambiguous statements about federal securities law application left Ripple without adequate guidance.

Ripple's Chief Legal Officer, Stuart Alderoty, clarified on X that the appeal is limited to evidence already presented. He highlighted the lack of new document disputes in this phase, minimizing “drama” in the proceedings. Alderoty reiterated that XRP has been deemed a non-security and highlighted that the SEC is not challenging this aspect.

This filing comes after the SEC filed its Form C last week, requesting the court to reassess the district court's ruling that favored Ripple on XRP sales through trading platforms. The SEC's appeal focuses on claims that Ripple executives Brad Garlinghouse and Chris Larsen violated securities laws by selling XRP and allegedly aiding Ripple's violations.

The SEC's appeal seeks to review the court's rulings on XRP sales on exchanges and personal sales by the executives. The agency initially claimed that Ripple raised $1.3 billion through unregistered securities sales of XRP, leading to the SEC's lawsuit in 2020.

However, a New York court ruled last year that Ripple's programmatic XRP sales did not violate securities law, ultimately favoring Ripple in this aspect of the case. The court did, however, require Ripple to pay $125 million for direct institutional sales, which is significantly lower than the SEC's proposed $2 billion fine.

In response, Alderoty stated that the SEC's “distractions” have become “background noise,” adding that the “hard part of the fight” is now in the past.

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