Ripple’s CLO reveals SEC’s last-ditch hopes – Will it work?

The long running legal battle between Ripple and the US Securities and Exchange Commission (SEC) is getting intense as both parties are looking for an edge in the last remaining tussle. Ripple’s chief legal officer just dropped a major prediction about the 2nd Circuit’s potential moves. 

Ripple had officially filed a notice of cross-appeal against the SEC. It aims to take its case to the Court of Appeals for the Second Circuit. The cross-appeal will address the commission’s original appeal, filed on October 2, as well as the defendant’s response to a federal judge’s ruling that imposed a $125 million penalty for securities law violations.

Ripple CLO’s bold prediction

Stuart Alderoty, Ripple’s CLO in an X post suggested that the best the SEC can realistically hope for is a remand ahead. He suggested that the Second Circuit would either affirm Judge Torres or expand her ruling.

He added, that during the SEC’s failed ‘interlocutory’ appeal, Judge Torres made it clear that ‘Howey’ and all of Ripple’s defenses would come back on the play. This also includes Fair Notice.

Ripple CLO mentioned that the Fair Notice standard questions whether an ‘ordinary intelligence’ person was aware of what the law prohibited. However, the SEC could end up arguing to Judge Torres that she wasn’t a person of ‘ordinary intelligence’ when she ruled against them, he added.

He compared the case with Moby Dick but now it’s feeling less like Moby Dick and more like a quirky blend of Moby Dick meets My Cousin Vinny.

XRP whales on the move

Data provided by Santiment hints that XRP whales might be gearing up before the major hearing in the case. It highlighted that XRP Ledger has recorded a spike in active wallets recently. More than 35,700 unique wallets making at least one transfer in a single day which is the highest in over 3 months.

It added that around 3,800 new wallets were created in a single day and it was the highest amount seen over the last 7 months. XRP price has seen a minor recovery of 2% in the last 7 days. XRP is trading at an average price of $0.547, at the press time.

Stakes high in cross-appeal

On October 10, Ripple submitted a cross-appeal to the US District Court for the Southern District of New York. It intends to escalate the matter to the Court of Appeals for the Second Circuit. The court will look into the SEC’s original appeal and the order sent out to Ripple for paying $125 million.

The commission had sought a $2 billion fine, while Ripple contends that any penalty should not exceed $10 million. The stakes remain high in the crucial case for regulatory clarity in the Crypto industry. This legal dispute began in 2020, when the regulator accused Ripple of selling its cryptocurrency, XRP, as an unregistered securities offering.

A key ruling in July 2023 stated that Ripple’s institutional sales of XRP violated securities laws, while its public sales and distributions were not considered securities.