US SEC takes next steps in its appeal against earlier Ripple ruling as case forges on

The U.S. Securities and Exchange Commission took the next steps in appealing a previous judgment in its ongoing legal battle with Ripple Labs. 

The agency filed late on Thursday what is called a "Civil Appeal Pre-Argument Statement" or Form C. 

The agency said it is looking to see whether the U.S. District Court for the Southern District of New York made an error, including matters involving Ripple CEO Brad Garlinghouse and co-founder Chris Larsen. The SEC also asked for the issues to be reviewed "de novo," meaning asking the court to review a decision based on questions on how the law was applied. 

"Whether the district court erroneously granted partial summary judgment in favor of defendants with respect to Ripple’s offers and sales of XRP -1.04% on digital asset trading platforms (and Garlinghouse’s and Larsen’s aiding and abetting of those offers and sales), Garlinghouse’s and Larsen’s personal offers and sales of XRP, and Ripple’s distributions of XRP in exchange for consideration other than cash," according to the form. "These issues are to be reviewed de novo." 

Ripple's Chief Legal Officer Stuart Alderoty responded to the SEC’s form, in a post on X on Thursday and said the firm plans to file its Form C next week.

“No surprises here — once again it’s been made clear. The Court’s ruling that ‘XRP is not a security’ is NOT being appealed,” Alderoty said in the post. “That decision stands as the law of the land.”

The SEC initially appealed on Oct. 2, citing Supreme Court precedent. 

“We believe that the district court decision in the Ripple matter conflicts with decades of Supreme Court precedent and securities laws and look forward to making our case to the Second Circuit," an SEC spokesperson told The Block earlier this month.

Soon after, Ripple filed a notice to cross-appeal. That move was done to "ensure nothing’s left on the table, including the argument that there can’t be an 'investment contract' without there being essential rights and obligations found in a contract," said Alderoty, in a post on X on Oct. 10. 

In 2020, the SEC accused Ripple of raising $1.3 billion through the sale of XRP, which it says is an unregistered security. Over a year ago, U.S. District Court for the Southern District of New York Judge Analisa Torres ruled that some of Ripple’s sales, called programmatic, of XRP did not violate securities laws because of a blind bid process in place for them. She did, however, rule that other direct sales of the token to institutional investors were securities. Later in August, Judge Torres ordered Ripple to pay $125 million in fines.

The SEC also previously moved to secure an interlocutory appeal last year, which was rejected by Judge Torres. That kind of appeal is filed while a case is still going on. Torres said the agency did not demonstrate that the appeal would “materially advance the ultimate termination of the litigation.”