Ripple Labs has submitted a Form C in the United States Court of Appeals for the Second Circuit, challenging a recent ruling by the US Securities and Exchange Commission (SEC). The company announced the appeal on Oct. 25, with Ripple’s chief legal officer, Stuart Alderoty, confirming the filing via an X post. He emphasized that “the SEC can’t submit new evidence or ask [Ripple] to produce more.”
This appeal comes after an August ruling by the US District Court for the Southern District of New York, which fined Ripple $125 million for its institutional sales of XRP, determining that these transactions constituted securities offerings.
Ripple’s appeal disputes the district court’s classification of its institutional XRP sales made directly to accredited investors as securities transactions. The primary issue in the appeal is the court’s interpretation and application of the Howey test, which is used to determine whether a transaction qualifies as an investment contract under US securities law.
The Form C filing outlines Ripple’s legal strategy, requesting a de novo review of the case. This type of review allows the appeals court to reconsider the legal interpretations made by the district court without deferring to the lower court’s conclusions. Alderoty expressed optimism in his X post, stating that the SEC’s approach to the case, which he characterized as aiming to create “distraction and confusion for Ripple and the industry,” is now “just background noise.”
The filing from Ripple follows an Oct. 16 appeal from the SEC, which questioned the district court’s partial summary judgment in favor of Ripple. The SEC did not contest the ruling that XRP is not a security when sold programmatically on digital asset exchanges but sought a review of the court’s application of securities law regarding institutional sales.
Judge Analisa Torres had previously ruled in July 2023 that XRP does not qualify as a security when sold on digital asset exchanges, marking a partial victory for Ripple Labs.