A new update has emerged in the prolonged legal battle between the U.S. Securities and Exchange Commission (SEC) and Ripple Labs as the possibility of an appeal by the SEC looms large. The SEC, which recently saw its $2 billion penalty request significantly reduced to $125 million, may challenge the court’s decision regarding classifying XRP sales on secondary markets as non-securities. This ruling, delivered by District Judge Analisa Torres, has been pivotal in the ongoing conflict between Ripple and the SEC, with both sides claiming partial victories.
Ripple’s Partial Win and SEC’s Potential Next Move
Ripple Labs is celebrating what they view as a major win, especially given that the final penalty is drastically lower than what the SEC initially sought. Ripple had initially hoped for a fine as low as $10 million, but the final judgment landed at $125 million—still a significant reduction but 1,150% higher than Ripple’s proposal.
Will the SEC Appeal the XRP Secondary Sales Decision?
The SEC, however, has not conceded defeat. According to legal experts, including Marc Fagel and Preston Byrne, the SEC might focus its appeal on the July 2023 summary judgment, particularly the court’s decision that secondary XRP sales do not constitute securities. The SEC’s spokeswoman, speaking to Fox Business reporter Eleanor Terrett, emphasized that the court recognized the “egregiousness” of Ripple’s conduct, citing the likelihood of future violations.
The SEC is reportedly weighing its options, and while an appeal of the remedies ruling is deemed unlikely, contesting the summary judgment remains a possibility. The agency has 60 days from the final judgment to make this decision, a period that began with the court’s ruling.
Market Impact and Industry Reactions
The Ripple judgment had immediate and significant effects on the market, particularly the price of XRP. Following the ruling, XRP’s value surged by over 20% within 24 hours, and in South Korea, XRP outperformed major cryptocurrencies like Bitcoin and Ethereum in daily trading volumes.
Ripple Partners with DIFC to Boost Blockchain in the UAEDespite the SEC’s potential appeal, Ripple’s leadership, including CEO Brad Garlinghouse, remains optimistic. The company’s strategic growth in international markets could help mitigate any negative impact should new restrictions be imposed on its operations within the United States. However, the uncertainty surrounding the SEC’s next move continues to keep both industry stakeholders and legal experts on edge.
Legal Experts Weigh In
Legal commentators, including James Murphy, also known as MetaLawMan, provided insights during a recent appearance on “The Wolf Of All Streets Podcast.” Murphy highlighted that while the penalty was reduced, the SEC might not let the case rest, especially given the broader implications for its enforcement program. The ruling against the SEC’s claim for a large disgorgement without proving actual losses could impact other cases the agency wishes to pursue.
Murphy also noted the potential for both Ripple and the SEC to appeal the judgment. If the SEC chooses to contest the summary judgment, Ripple might cross-appeal, challenging the court’s finding that certain institutional sales of XRP violated securities laws. The legal battle, which has already lasted four years, could extend further if appeals are filed, delaying a final resolution by at least another 18 months.
