Ripple Files Cross Appeal, Outlining Issues to Raise Against SEC

Ripple's Chief Legal Office, Stuart Alderoty, announced on X that Ripple has filed a Civil Appeal Pre-Argument Statement, also known as Form C, on Oct. 25.

Cryptocurrency company Ripple has filed a Civil Appeal Pre-Argument Statement, also known as Form C, on Oct. 25 with the U.S. Court of Appeals for the Second Circuit.

The filing outlines specific grounds on which the company will challenge the previous ruling on institutional sales from the Southern District of New York court.

In the filing, Ripple stated that each point of appeal is subject to “de novo” standard of review, which means the court should re-examine its previous decisions based on how the law was applied.

The company's Form C filing comes a few days after SEC's previous Form C filing on Oct. 18. The SEC asked the court to reconsider its decision to allow the sales of the XRP token on exchanges, as well as personal sales of the token by Ripple CEO Brad Garlinghouse and co-founder Chris Larsen.

One of the main subjects of appeal that Ripple raised was the district court’s application of the Howey test to Ripple’s XRP transfers. The company stated the transfers covered an investment of money in a common enterprise with a reasonable expectation of profits solely from Ripple’s efforts.

Another point of appeal questions whether the court’s decision took into account Ripple’s lack of fair notice in its conduct. The company argued that the SEC’s statements on the application of federal securities laws for digital assets and digital currency as “inconsistent” and “deliberately vague.”

Moreover, Ripple questioned whether an investment contract in accordance with Section 5 of the SEC Act of 1933 requires “essential ingredients” in the form of a contract that imposes post-sale obligations on the seller and gives buyers the right to demand and receive profits.

Lastly, Ripple raises the issue of whether the the requirements list in Rule 65 of the Federal Rules of Civil Procedure bar an injunction that would do “no more than to direct the enjoined party to obey the law.”

Regarding the cross appeal, Stuart Alderoty, Ripple's Chief Legal Officer, said in a recent tweet that the focus of the case is not on whether XRP is a security.

According to Alderoty, XRP is legally classified as a non-security. Instead, he alleges that the SEC is attempting to “create distraction and confusion” for Ripple and the broader crypto industry.

Furthermore, he believes that hard part of the case has already passed as Ripple will not be required to present more evidence or fight over documents.

“The Appeals Court reviews the record that has already been set…and we have a great record. The SEC can’t submit new evidence or ask us to produce more,” Alderoty stated.

Earlier this year, the SEC accused Ripple Labs of orchestrating seven years of XRP token sales that were not registered with the regulatory body, to the tune of $1.3 billion, due to the token being classified as an unregistered security.

The SEC also alleged that XRP created profit expectations for investors, which were realized through sales on exchanges and over-the-counter trades.

With the case approaching a new chapter, both sides are preparing for a lengthy legal dispute that could change the crypto landscape in the U.S.