Good day everyone,
I hope you are all having a good day, welcome to CryptoGod-1's blog on all things crypto. In this post I will be looking at the recent Form C Appeal filing by Ripple against the SEC's ruling on XRP.
Ripple File Form C Appeal
A U.S. Securities and Exchange Commissions (SEC's) ruling on Ripple which has seen a $125 million penalty handed to the company and asserted that its token sales qualify as securities has been challenged with a Form C appeal. Ripple Labs are escalating their legal battle with the SEC after filing the Form C cross-appeal in the the United States Court of Appeals for the Second Circuit.
The filing outlines Ripple’s primary arguments against the SEC’s classification of its XRP token sales and Ripple are looking to overturn portions of the earlier court decision which required a $125 million penalty over their institutional XRP sales. The Chief Legal Officer for Ripple, Stuart Alderoty, revealed that the case is not about whether XRP is a security. He posted on X:
“XRP is uniquely situated as having clarity (alongside BTC) in not being classified as a security. The SEC is not challenging that ruling, which stands as the law of the land.”
The appeal by Ripple rests on four main arguments - the definition of an investment contract, the application of the Howey Test, its fair notice defense, and the specificity of the court’s injunction. Part of the Ripple case is that it asserts that the district court misinterpreted investment contracts under the 1933 Securities Act back when it ruled that Ripple’s institutional XRP sales were securities offerings.
Ripple contend that an investment contract should, by legal standards, include elements like post-sale obligations on the seller and entitle buyers to profits from the seller’s activities. They argue that these factors were missing from its XRP sales. Ripple have also argued how the Howey Test was applied in this case. The test is a 1946 legal precedent for determining securities transactions.
Ripple dispute the court's findings around an “investment of money” and a “common enterprise,” two essential criteria in the Howey framework. They have argued that their institutional XRP sales do not meet these criteria, especially as the token operates in a decentralized market where investor profits are not guaranteed by Ripple’s efforts alone.
Another major point is that of Ripple’s invocation of the fair notice defence. The company asserted that the SEC used an enforcement approach which failed to provide clear guidance and this in turn deprived Ripple of key information in avoiding regulatory infringement. The pro-XRP attorney Jeremy Hogan also made a comment on X regarding Ripple’s fair notice argument. He stated that if it is successful then it has the potential to “cripple the SEC enforcement regime” and set a strong precedent for future cryptocurrency cases. This could end up protecting companies from regulatory penalties due to a lack of clarity.
Ripple have also argued against the court’s injunction, where it stated the company was required to “follow the law.” Ripple maintain that the vague wording of the law means it lacks the clarity and specificity needed to comply fully.
Have a great day.
Peace. CryptoGod-1.
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