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Ripple Labs is gearing up to challenge the United States Securities and Exchange Commission’s (SEC) appeal against a court ruling that found retail XRP sales did not violate securities laws.
Ripple CEO Commits to Upholding XRP’s Status
On October 3, Ripple CEO Brad Garlinghouse announced in a social media post that the company is prepared to fight the SEC’s appeal, emphasizing the determination to maintain XRP’s classification as a non-security. Garlinghouse described the SEC’s appeal as “misguided and infuriating,” asserting:
“Somehow, they still haven’t gotten the message: they lost on everything that matters. Ripple, the crypto industry, and the rule of law have already prevailed.”
Background: The SEC’s Appeal
The SEC filed an appeal on October 2, challenging a ruling by the Southern District Court of New York, which concluded that XRP cannot be classified as a security. This ruling, issued on July 13 by Judge Analisa Torres, determined that the sales of XRP to retail investors did not constitute an illegal securities offering, and the altcoin did not meet the criteria of a security under the Howey test.
Institutional Offerings and Penalties
However, the court found that Ripple’s institutional offerings violated securities laws due to the manner in which the sales were conducted. This led the SEC to propose a $1.95 billion penalty against Ripple Labs. Judge Torres later reduced this penalty to $125 million and mandated that Ripple must register with the SEC if it intends to offer securities in the future.
Stay Order and Ongoing Legal Battles
Following the court’s decision, both parties agreed to a stay order in a September 4 filing. Ripple was required to deposit 111% of the $125 million fine into a secure account, pending the resolution of any appeal. This arrangement indicated the SEC’s intention to appeal the ruling.
Ripple’s Chief Legal Officer, Stuart Alderoty, commented on the SEC’s decision to appeal, describing it as “not surprising.” He criticized the agency and its current chair, Gary Gensler, for engaging in “litigation warfare” against the crypto industry.
“This just prolongs what’s already a complete embarrassment for the agency,” Alderoty wrote on October 3, adding that Ripple might pursue a cross-appeal if necessary.
Possible Duration of the Appeal Process
Hodl Law founder Fred Rispoli speculated that the appeal process could be lengthy. He noted that a ruling from the Second Circuit appeals court is unlikely before January 2026, with a more realistic timeline around March or April 2026.
SEC Chair Under Scrutiny
Meanwhile, SEC Chair Gary Gensler has faced criticism from U.S. lawmakers for the agency’s aggressive enforcement actions toward the crypto sector. During a recent congressional hearing, Gensler was criticized for coining terms like “crypto asset security” and the SEC’s ambiguous language regarding digital assets such as Ethereum.
Ripple’s Global Expansion Amid Legal Challenges
Despite ongoing legal complexities, Ripple continues to focus on global expansion. The company recently secured in-principle approval in Dubai, marking a significant step in its international growth strategy.
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