The U.S. SEC officially files its civil appeal pre-argument (a.k.a. Form C) alongside relevant attachments in its lawsuit against Ripple.
Famous defense lawyer James K. Filan brought the public’s attention to the new filing in a tweet yesterday.
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SEC Files Form C
According to the filing, the SEC provided relevant details of the lawsuit, including the date of the final judgment and appeal notice, the district court ruling judge, and the docket number.
Furthermore, the SEC summarized the district court’s decision, emphasizing that it denied and granted its motion for summary judgment in part.
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Specifically, the agency noted that the court declared that Ripple’s offers and sales on digital exchanges and the company’s use of XRP as a payment method do not constitute investment contracts. However, the court held that Ripple violated securities laws by offering and selling XRP to institutional clients.
It pointed out that the decision prompted the court to impose a penalty of $125.03 million against Ripple and an injunction to prevent the company from future violation of section 5 of the 1933 Securities Act.
SEC Appeal Pre-Argument
Expectedly, the SEC Form C filing provided insights into the aspect of the case the regulator seeks to appeal. The commission’s appeal raises the question of whether the New York district court erred in ruling that Ripple’s XRP sales on digital exchanges, including those by the company’s executives Brad Garlinghouse and Chris Larsen, do not constitute investment contracts.
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Notably, these transactions were categorized as programmatic sales
deemed
non-securities on July 13, 2023.
Additionally, the securities regulator seeks to appeal the aiding and abetting charges it initially filed against Garlinghouse and Larsen. Recall that the SEC
dropped
this case when it was scheduled for a jury trial in 2023. Over a year after dropping the charges, the regulator seeks to revive the case against Ripple’s executives.
Lastly, the SEC is challenging the district court’s verdict on Ripple’s use of XRP as a kind of payment method. The agency classified these transactions as Ripple’s other distributions of XRP.
Notably, the SEC wants the Second Circuit to review these issues “de novo.” This suggests that the SEC wants the appellate court to review the issues from scratch without deferring to the trial court’s previous decisions.
Ripple CLO Reacts, Reiterates XRP Remains Law of the Land
Reacting, Ripple’s CLO Stuart Alderoty said the SEC’s Form C filing does not surprise him, as he previously predicted that the regulator would challenge these issues on appeal.
Nonetheless, he emphasized that the regulator is not appealing Judge Analisa Torres’ declaration, indicating that “XRP is not a security.” Consequently, he
reiterated
that XRP’s non-security status remains the law of the land.
Meanwhile, the CLO disclosed that Ripple will file its Form C next week. This filing relates to the company’s cross-appeal
introduced
on October 10. Ripple believes the district court erred in its institutional sales ruling, which was declared in SEC’s favor.
SEC Form C Filing Excites Attorney Hogan
In the meantime, legal experts like Attorney Jeremy Hogan
expressed
excitement about the SEC’s Form C filing. Attorney Hogan stated that the SEC’s appeal mainly focuses on money, suggesting that the commission hopes to increase Ripple’s fine through its appeal.
He speculated that if Ripple loses the appeal, the injunction imposed on its future institutional sales of XRP might change, indirectly affecting order compliance.
In addition, the lawyer criticized the SEC, characterizing the commission’s revival of aiding and abetting charges against Ripple’s execs as a “chicken move.”
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