The ongoing legal battle between the SEC and Ripple Labs has taken a new turn. On October 2, 2024, the Securities and Exchange Commission (SEC) officially filed a Notice of Appeal with the United States Court of Appeals for the Second Circuit. The SEC is appealing the final judgment entered by the District Court on August 7, 2024, a decision that was pivotal in Ripple’s favor regarding XRP’s classification as a security.
Breakdown of the SEC’s Appeal
As noted by attorney Jeremy Hogan, this appeal focuses on the court’s ruling regarding Ripple’s programmatic sales of XRP, which the SEC argues should have been classified as securities sales. Hogan outlines that the SEC’s main motive is financial; if they succeed, the SEC stands to receive more financial compensation from Ripple. However, Hogan also points out that this appeal risks broader implications, as a favorable ruling for the SEC could extend the agency’s authority over the entire crypto market.
This appeal differs from previous SEC moves as it is considered an “appeal by right,” meaning that the trial judge cannot block it. Hogan also highlights that the SEC has an uphill battle, with a statistically low chance of success, especially given the fact-heavy way Judge Torres wrote the original ruling.
Ripple and XRP Unlikely to See Immediate Changes
Even if the SEC were to win this appeal, Hogan emphasizes that it would largely result in financial consequences rather than any change to the current use and classification of XRP. Ripple’s operations are not expected to be disrupted anytime soon. A ruling from the appellate court could take until 2025 or 2026, providing some breathing room for Ripple and XRP users.
Timing of SEC’s Internal Changes
Interestingly, Hogan draws attention to a significant coincidence—on the very same day the SEC filed its appeal, Attorney Grewal, the SEC’s Director of Enforcement, announced his resignation. Hogan speculates that this could be more than just chance, implying that internal leadership changes could be tied to the SEC’s evolving strategy regarding cryptocurrency regulation.
Marc Fagel, a former SEC attorney, responded to Hogan’s speculation by pointing out that such resignations are typical around this time in the enforcement division, often coinciding with political changes or shifts within the SEC’s chairmanship. Jungle Inc Crypto News also weighed in, suggesting that Grewal may be moving on to a high-paying private sector position—a common career move after a government tenure.
Broader Implications for the Crypto Industry
The industry now waits with bated breath for the SEC’s next filing, expected by mid-December 2024. The SEC is unlikely to challenge the ruling that “XRP is not a security,” but the ripple effects of this appeal could go much further. The SEC’s move may set a precedent for the regulation of other digital assets, leaving the future of the crypto space on uncertain footing.
For now, Ripple continues to push forward, with XRP remaining a crucial asset in the digital payments world. The broader crypto community will be keeping a close watch on how the SEC’s appeal plays out, as its outcome could shape the legal landscape for years to come.
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