SEC’s Appeal Against XRP Ruling Limits its Oversight of Crypto Markets
On Wednesday, the U.S. Securities and Exchange Commission (SEC) announced it is appealing a court ruling that limited its authority to regulate cryptocurrency markets. The SEC plans to request a review from the 2nd U.S. Circuit Court of Appeals in Manhattan regarding a July 2023 decision stating that the XRP token sold by Ripple Labs on public exchanges does not qualify as a security under legal definitions.
This ruling by U.S. District Judge Analisa Torres determined that approximately $757 million in XRP sales were not subject to the investor protection laws enforced by the SEC. If the appeals court upholds this decision or interprets securities law narrowly, it could hinder the SEC’s ability to oversee platforms like Coinbase (COIN.O) and other entities involved in trading newer, non-traditional financial products.
Judge Torres also partially favored the SEC, ruling that another $728 million in XRP sales to institutional investors should have adhered to securities laws. In August, she imposed a $125 million fine on Ripple, but this fine is currently on hold pending the appeal process. The SEC had initially sought a $2 billion penalty. The stay will remain in effect until the 2nd Circuit issues its ruling. Ripple retains the option to appeal any parts of Torres’ rulings it finds unfavorable.
Ripple CEO Brad Garlinghouse described the SEC’s decision to appeal as “misguided” and “infuriating,” although he noted it was not unexpected. “While we’ll fight in court for as long as we need, let’s be clear: XRP’s status as a non-security is the law of the land today,” Garlinghouse stated in a post on X.
