The US Securities and Exchange Commission (SEC) has filed its opening brief challenging a court decision in favor of Ripple.
In its January 15 filing, the SEC claims that Ripple’s XRP sales to retail buyers should be classified as unregistered securities transactions.
According to the SEC:
“The district court erred in both fact and law by concluding that Defendants’ offers and sales of -received cash compensation, there were no offers and sales of investment contracts.”
The financial regulator also argued that Ripple’s activities promoted profit expectations among buyers and met the criteria for an investment contract under the Howey Test.
In view of this, the financial regulator has asked the Court of Appeal to overturn the incorrect ruling of the lower court.
The SEC’s appeal follows its partial defeat in July 2023 when Judge Analisa Torres ruled that only XRP sales to institutional investors qualified as securities. The court concluded that sales to retail investors did not violate U.S. federal securities laws, prompting the SEC to reverse this outcome.
The case started in December 2020 and ended when Ripple was fined $125 million in August 2024. However, the SEC’s appeal has further complicated the ongoing legal battle.
Ripple’s answer
Ripple’s Chief Legal Officer, Stuart Alderoty, dismissed the SEC’s appeal as a repetition of arguments that have already failed in court.
Alderoty emphasized that Ripple remains resilient and views the SEC’s actions as an obstacle to broader regulatory clarity. He stated that the company would respond formally to the brief while continuing to focus on growth in a changing regulatory environment.
He added:
“The SEC lawsuit is just noise. A new era of pro-innovation regulation is coming, and Ripple is thriving.”
Ripple CEO Brad Garlinghouse also echoed this sentiment, saying:
“[The SEC’s brief is] one definition of madness…. Doing the same thing over and over again and expecting different results. Genslers SEC has taken this to heart.”