Ripple Labs filed a Form C with the Court of Appeals on Thursday, escalating its legal battle with the US Securities and Exchange Commission (SEC).
The motion is a pre-argument statement asking the appellate court to apply a “new” standard, essentially a reassessment of an earlier Southern District of New York ruling regarding Ripple’s XRP trading and securities classification. be.
The appeal questions whether the district court’s use of the Howey test was appropriate to classify XRP as an investment contract. Specifically, Ripple believes that the sale of XRP to financial institutions should not be treated as a securities transaction because it requires Ripple to “invest funds in a general company with the expectation of profits derived solely from its efforts.” He claims that there is no.
Additionally, Ripple is challenging the court’s “fair notice” decision, arguing that the SEC’s inconsistent and ambiguous statements regarding the application of federal securities laws deprived Ripple of adequate guidance. .
Ripple’s chief legal officer, Stuart Alderoti, made it clear that the appeal regarding X will be limited to evidence that has already been submitted. He stressed that at this stage there are no disputes over new documents and “drama” in the proceedings has been kept to a minimum. Alderoti reiterated that XRP is considered a non-security and emphasized that the SEC does not dispute this aspect.
Ripple’s filing follows a request by the SEC last week, in which the agency asked the court to reevaluate a district court’s ruling in favor of Ripple regarding the sale of XRP through its trading platform.
The SEC’s appeal primarily focuses on allegations that Ripple executives Brad Garlinghouse and Chris Larsen violated securities laws by selling XRP and allegedly aiding and abetting Ripple’s violations. The appeal seeks review of the court’s ruling regarding XRP sales on exchanges and personal sales by executives.
Ripple’s conflict with the SEC, which began in 2020, centered on the agency’s initial claims that Ripple raised $1.3 billion through unregistered securities sales of XRP. A New York court ruled last year that Ripple’s programmatic XRP sales did not violate securities laws, but required Ripple to pay $125 million for direct sales to institutional investors. However, this amount is much lower than the SEC’s proposed $2 billion fine.
In response, Alderoti said the SEC’s “distractions” had become “ambient noise,” adding that the “hard part of the battle” was now in the past.
