Ripple Files Cross-Appeal Challenging Key Decisions in Ongoing SEC Lawsuit

• Ripple challenges the court’s previous ruling by filing a cross-appeal to revisit four central issues.
• Ripple’s appeal targets clarity on “investment contract” standards and the SEC’s guidance on crypto classification.
• Ripple’s Chief Legal Officer indicates no further documentation battles as the SEC cannot submit new evidence.

California-based blockchain firm Ripple has submitted its anticipated cross-appeal, filing a Form C that outlines challenges to specific points from a recent court ruling. This filing, made shortly after the SEC asked for an extension in its time to file its main brief, concerns several critical aspects of a longstanding legal battle over Ripple’s digital asset XRP.

This ongoing lawsuit between Ripple and the SEC, now approaching four years, recently took another turn. The SEC initially filed its own Form C on October 18, contesting the part of the court’s decision that concluded Ripple’s programmatic XRP sales on crypto exchanges were not securities. Ripple’s counter-appeal now seeks to revisit key rulings from this decision.

In the recent appeal filed, Ripple wants the court to help determine what is referred to as an “investment contract” under the Securities Act of 1933. Ripple’s defense states that the term should apply where there is an agreement that provides buyer rights to profit from the seller’s actions. Ripple contends that a precise definition of this term is essential for classifying other cryptocurrencies under federal law, which could impact future crypto cases.

Challenging the Howey Test Decision on XRP Sales

Additionally, Ripple’s appeal questions the court’s prior decision that XRP sales met the criteria set by the Howey test, the standard used to determine what qualifies as a security. This judgment led to a fine of $125 million imposed on Ripple for its alleged failure to register XRP sales to institutional investors under federal securities laws. Ripple argues that these sales did not align with the Howey test and asks for a fresh evaluation of these transactions.

Ripple’s third point of appeal revisits the SEC’s guidance on cryptocurrency regulation, specifically highlighting inconsistencies that have made compliance challenging. The defense cites its “Fair Notice” argument, asserting that the SEC’s regulatory guidelines were insufficiently clear, making it unreasonable to expect adherence to rules that lacked clear standards. Ripple maintains that any penalties or sanctions under such unclear guidelines are unjust.

The final aspect of Ripple’s appeal targets the injunction issued by the court, which aims to prevent Ripple from violating securities laws in future sales. Ripple argues that the terms of the injunction remain ambiguous, and thus, they have requested the court clarify the obligations under Rule 65 of the Federal Rules of Civil Procedure, which outlines compliance expectations for entities under such orders.