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Ripple's relationship with the US Securities and Exchange Commission (SEC) is continuing to sour as the blockchain payments firm has appealed against the regulator's appeal.
Yesterday, Ripple filed a Form C civil appeal to the US Court of Appeals for the Second Circuit in order to counter the SEC's appeal against Judge Analisa Torres’ decision that Ripple’s sales of XRP on retail exchanges did not violate federal securities laws.
Dating back to a 2020 lawsuit, the SEC accused Ripple of conducting an unregistered securities offering worth $1.3 billion by selling XRP, holding Ripple CEO Brad Garlinghouse and Ripple co-founder Chris Larsen accountable.
Last July, the judge in the Southern District of New York ruled that XRP is “not necessarily a security on its face.”
“Accordingly, the SEC’s motion for summary judgment on the aiding and abetting claim against Larsen and Garlinghouse is denied,” the order from Judge Torres detailed.
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Ripple was fined $125 million in early August, which CEO Brad Garlinghouse described as a “victory for Ripple.”
The figure was just a sliver of what the Ripple community had potentially faced. Initially, the regulator sought $1 billion in disgorgement and prejudgment interest and $900 million in civil penalty.
Instead, Judge Torres ordered Ripple to pay $125 million in civil penalties and imposed an injunction against future securities law violations. Torres found that 1,278 institutional sale transactions by Ripple violated securities law.
But earlier this month, in a "notice of appeal" to the Second Circuit Court of Appeals, the SEC pushed back against Judge Torres's ruling.
"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."
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Now, Ripple's Form C filing will offer clarity on what arguments will be presented in court. Following this, both sides will agree on a briefing timeline, potentially prolonging the legal dispute into the following year.
Garlinghouse expressed his confidence in the case to journalist Eleanor Terrett, while taking a swing at Chair Gary Gensler. "I am so confident that we’re going to win the appeal, and that would really put a dagger in Gary Gensler’s whole agenda around crypto regulation," he said.
"Honestly, Ellie, I’m not losing any sleep over it at all. I’m so confident about it because I believe we’re on the right side of the law. I think we’re on the right side of history."
🚨NEW: Today, @Ripple will file its Form C, outlining at a high level what it will seek to appeal in the @SECGov’s case in the Second Circuit.
— Eleanor Terrett (@EleanorTerrett) October 24, 2024
As we saw the @SECGov appeal nearly everything it lost on at the district court level last week, Ripple is expected to appeal the only…
He also told Bloomberg that Gensler's "reign of terror on the crypto industry" is going to "come to an end very soon."
Of course, this is not the first time Garlinghouse has spoken unfavourably of Gensler. "Gensler's SEC has repeatedly acted outside the law," Garlinghouse tweeted earlier this year.
Gensler’s SEC has repeatedly acted outside the law – not going unnoticed by Judges admonishing the agency for a "gross abuse of the power entrusted to it by Congress" (DEBT Box case) and for acting without "faithful allegiance to the law" (Ripple case). Let’s not also forget… https://t.co/vay6WDBfJc
— Brad Garlinghouse (@bgarlinghouse) March 25, 2024
Appearing onstage at DC Fintech Week recently, Garlinghouse nonetheless spoke supportively of Kamala Harris and the Democrats' approach to crypto despite Donald Trump pledging to fire Gensler if he were to be elected.
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