Ripple’s Filing to Contest SEC’s Allegations
Ripple Labs has filed a Form C with the US Court of Appeal for the Second Circuit, aiming to reverse a recent ruling by the US Securities and Exchange Commission (SEC) that categorized Ripple’s institutional XRP sales as securities transactions.
This filing represents Ripple’s ongoing challenge to the SEC’s interpretation of securities law as applied to XRP, including the court’s application of the Howey test. Stuart Alderoty, Ripple’s Chief Legal Officer, confirmed the Form C submission in a recent tweet on X.
He stated that the SEC is prohibited from introducing new evidence or requesting additional documentation from Ripple during the appeal process. Alderoty noted that Ripple is ready to contest the SEC’s arguments based on existing court records.
Ripple’s Form C appeal specifically contests the US District Court for the Southern District of New York’s ruling in August. The court imposed a $125 million fine on Ripple for what it deemed securities violations in the company’s token sales to accredited investors.
According to Ripple, these transactions do not meet the criteria set by the Howey test to qualify as securities.
Ripple’s Argument on the Howey Test Misapplication
The Howey test, established by the Supreme Court in 1946, is a legal standard used to determine whether a transaction should be classified as an investment contract and, therefore, a security. Ripple’s legal team contended that the district court misapplied this standard to this token’s institutional sales, resulting in an erroneous ruling.
Ripple’s Form C filing calls for a de novo review, which allows the appeal court to assess the case from scratch without referring to previous court findings or interpretations. Ripple’s legal stance is that XRP, as a digital asset, does not constitute a security, and the company’s direct sales to institutional investors should not be categorized as such.
Alderoty has been vocal about his belief that the SEC’s approach introduces “distraction and confusion” for Ripple and the broader digital asset industry.
SEC’s Appeal
This filing closely follows an Oct. 16 appeal from the SEC, which questioned aspects of the district court’s partial summary judgment that earlier ruled in favor of Ripple on programmatic sales of its native token on digital asset exchanges.
Judge Analisa Torres of the US District Court for the Southern District of New York ruled in July 2023 that XRP’s programmatic sales do not constitute securities transactions, a decision the SEC did not dispute in its recent appeal. However, the SEC’s filing requests a review of securities law application in the context of institutional XRP sales.
Regardless, Ripple’s filing seeks a clear review of its institutional transactions, maintaining that the company’s token sales should not be classified under securities law. By filing Form C, Ripple aims to secure a definitive answer on XRP’s legal status for its institutional sales.
XRP Ledger Reaches Token Issuance Milestone
Meanwhile, the XRP Ledger (XRPL) has hit an all-time high in token issuance. This surge followed the launch of First Ledger, a project enabling token trades directly through Telegram.
It has driven an unprecedented wave of activity on the XRP blockchain. This development has positioned the XRP Ledger as a competitor in the DeFi space, with its scalability and ease of access attracting new users.
According to data from crypto analytics platform Santiment, the number of tokens issued on the XRP Ledger peaked at 213 on Oct. 17, setting a new record. This number represents a 200% increase compared to the previous peak in October 2021.
However, this number has declined as of this writing. Despite the decrease, this milestone reflects XRPL’s evolving role in enabling decentralized finance (DeFi) transactions and blockchain-based token issuance.
Technical Analysis for XRP
Technical indicators hint at an XRP price rebound. The Moving Average Convergence Divergence (MACD) and the Relative Strength Index (RSI) display bullish signals, with RSI at 43, signaling potential upward momentum.
If momentum persists, XRP could test the resistance at $0.5550 near its Exponential Moving Averages (EMAs).
