On October 2, 2024, the U.S. Securities and Exchange Commission (SEC) announced its decision to appeal a federal court ruling in its ongoing legal battle against Ripple Labs, the company behind the cryptocurrency XRP. This move follows an August ruling that delivered a mixed outcome for both Ripple and the SEC.

Ripple, which has been under fire since 2020 for allegedly conducting a $1.3 billion unregistered securities offering through XRP sales, initially celebrated parts of the court’s decision. However, the appeal has reignited tensions between Ripple and the regulatory body.

Key Points from the August Ruling

In the earlier ruling, U.S. District Judge Analisa Torres made a distinction between different types of XRP sales. According to the court:

• Programmatic Sales: Ripple’s sales of XRP to retail investors on cryptocurrency exchanges did not violate securities laws.
• Institutional Sales: Ripple’s direct sales of XRP to institutional investors, worth $728 million, were found to be unregistered securities transactions, resulting in a $125 million fine for the company.

Despite this, the SEC had originally sought a much larger fine—around $2 billion—making the lower penalty a win for Ripple.

Ripple CEO Criticizes SEC’s Decision

Ripple’s CEO Brad Garlinghouse did not hold back in his response to the SEC’s appeal. He expressed frustration, calling the ongoing litigation a waste of taxpayer money. “The SEC has lost on everything that matters,” Garlinghouse stated, highlighting that the court ruled in Ripple’s favor on the programmatic sales of XRP, which was a key issue in the case.

Garlinghouse further criticized SEC Chair Gary Gensler for continuing what he sees as a “losing battle,” arguing that XRP’s status as a non-security remains unchanged, regardless of the SEC’s actions.

Ripple CLO Calls SEC Actions ‘Litigation Warfare’

Stuart Alderoty, Ripple’s Chief Legal Officer, echoed Garlinghouse’s sentiments. He emphasized that the court had found no victims or losses in the case, stating that the SEC’s relentless litigation is harming the industry rather than protecting investors. Ripple is now considering filing a cross-appeal to further challenge the SEC’s stance.

The news of the SEC’s decision to appeal has had a significant impact on XRP’s market value. The cryptocurrency’s price dropped by around 9% in just 24 hours, trading at just over $0.54 as of October 3, 2024. XRP, currently ranked 7th by market capitalization, has a market cap of $30.88 billion with a 24-hour trading volume of $2.54 billion.

What’s Next for Ripple?

As Ripple prepares to face the SEC once again, the company remains confident that the original ruling in its favor will stand. Both Garlinghouse and Alderoty believe that the SEC’s efforts are futile and costly, with little to gain from continuing the fight. Ripple’s legal team will assess their options, including the potential for a cross-appeal, as the case moves forward.

In the meantime, the cryptocurrency industry continues to watch closely, as the outcome of this case may have long-lasting implications for the regulation of digital assets in the United States.