The securities regulator is going to appeal a court’s ruling that gave Ripple an advantage
The US Securities and Exchange Commission (SEC) has filed an appeal in the ongoing legal battle with Ripple, signaling that the regulator is not backing down. On October 2, the SEC submitted a notice of appeal aiming to challenge the July 2023 ruling by Judge Analisa Torres, which was seen as a significant win for Ripple and the broader cryptocurrency industry.
Judge Torres had ruled that XRP, the native cryptocurrency of Ripple, was not classified as a security for secondary market sales. According to her judgment, XRP failed to meet the conditions outlined in the SEC’s Howey Test, which is used to determine whether an asset qualifies as an investment contract.
As a result, she concluded that secondary sales of XRP could not be deemed as unregistered securities transactions. However, the ruling also stated that early sales made by Ripple’s founders to institutional investors did qualify as securities transactions, leading to a partial victory for both sides.
The SEC’s appeal was expected, as the regulator has been under pressure to establish firmer control over the crypto space. At the same time, the SEC announced that its chief enforcement officer, Gubir Grewal, will step down on October 11.
Grewal has been a controversial figure, facing criticism for his aggressive enforcement actions against the cryptocurrency industry during his tenure. Sanjay Wadhwa will step in as interim enforcement director until a permanent replacement is appointed.
Ripple’s XRP has continued to attract attention despite the legal setbacks. Recently, Bitwise filed for an XRP ETF trust in Delaware, reflecting growing institutional interest. However, the SEC’s appeal could delay any potential approval of the ETF. The legal struggle between the SEC and Ripple is expected to shape the future of crypto regulation in the US.
