Ripple CEO calls SEC appeal ‘insane’ as legal battle heats up

The U.S. Securities and Exchange Commission (SEC) has filed opening briefs challenging the court’s ruling in favor of Ripple.

In a Jan. 15 filing, the SEC argues that Ripple’s sales of XRP to retail buyers should be classified as unregistered securities transactions.

According to the SEC:

“The district court found that defendants’ offers and sales of XRP to ordinary purchasers, including individual investors, who purchased on crypto asset trading platforms, and that Ripple’s offers and sales of XRP for which Ripple received non-cash consideration, were, in effect, It is not an offer or sale of an investment contract.

Financial regulators also argued that Ripple’s activities fostered the buyer’s expectation of profit and met the criteria for an investment contract under the Howie test.

In view of this, the financial regulator asked the Court of Appeal to reverse the lower court’s erroneous ruling.

The SEC’s appeal follows a partial loss in July 2023 when Judge Annalisa Torres ruled that only XRP sales to institutional investors qualify as securities. The court concluded that the sale to retail investors did not violate U.S. federal securities laws, and the SEC sought to reverse this finding.

The case began in December 2020 and ended in August 2024 with a fine of $125 million against Ripple. But the SEC’s appeal further complicated the ongoing legal battle.

Ripple’s reaction

Ripple’s chief legal officer, Stuart Alderoti, dismissed the SEC’s appeal as a repeat of arguments that have already failed in court.

Alderoti viewed the SEC’s actions as an obstacle to broader regulatory clarity and stressed that Ripple remains resilient. He said the company will formally respond to the briefing as it continues to focus on growth in a changing regulatory environment.

He added:

“The SEC lawsuit is just noise. A new era of pro-innovation regulation has arrived and Ripple is thriving.”

Ripple CEO Brad Garlinghouse echoed this sentiment, saying:

“(The SEC’s brief) is one of the definitions of insanity…doing the same thing over and over again and expecting a different result. Mr. Gensler’s SEC took this seriously.”

mentioned in this article