News 
January 17, 2025 
3 min. 
The US Securities and Exchange Commission (SEC) has filed an appeal to overturn a court ruling in its case against Ripple Labs. The SEC argues that XRP, a digital asset sold by Ripple, should be classified as an unregistered security when sold to retail investors. This filing follows a partial loss for the SEC in 2023.
In a January 15 filing to the Second Circuit Appeals Court, the SEC contested the ruling of Judge Analisa Torres. The judge had previously determined that XRP sales to retail investors were not considered unregistered securities, unlike sales to institutional investors. The SEC now seeks to reverse this decision, arguing that the sales to both retail and institutional investors should meet the criteria of securities under the Howey test.
The SEC claims that Ripple’s public marketing efforts led to expectations of profit from XRP purchases, which should qualify as investment contracts. According to the SEC, the difference between institutional and retail investors made by the previous court ruling is flawed, as it overlooks the broader impact of Ripple’s promotional actions.
SEC vs. Ripple: Defense and Legal Backdrop
Ripple’s legal team has criticized the SEC’s actions. The company’s Chief Legal Officer, Stuart Alderoty, described the SEC’s appeal as a repetition of failed arguments. Ripple CEO Brad Garlinghouse expressed uncertainty, stating that the SEC’s approach is unlikely to succeed. Ripple also faces a $125 million civil penalty, which was imposed after the court found the company liable for some aspects of the case.
The legal battle began in 2020, when the SEC filed a lawsuit against Ripple, alleging that the company had sold XRP as an unregistered security. A ruling in 2023 found that XRP was a security in some cases but not others. The case is now moving through the appeals process, and Ripple will have the chance to submit counter-arguments.
Potential Policy Changes Under New SEC Leadership
The ongoing appeal comes during a time for broader changes at the SEC. With the potential re-entry of Donald Trump into the White House, some industry experts predict a shift in the SEC’s regulatory approach. SEC Chair Gary Gensler is expected to step down, and a new administration could revise the agency’s stance on crypto-related cases. This could lead to a more crypto-friendly regulatory environment, potentially affecting ongoing cases like the one against Ripple.
