SEC Appeal in Ripple Case Excludes XRP Legal Status

The U.S. Securities and Exchange Commission (SEC) has confirmed in its latest Form C filing that it will not challenge the court’s ruling that XRP itself is not a security, a move that clarifies the legal standing of the token for holders [1]. While the regulator continues its appeal against Ripple Labs, the core legal status of the asset remains settled as "the law of the land," according to Ripple’s chief legal officer, Stuart Alderoty [1].

Scope of the SEC Appeal

The SEC’s appeal is now strictly limited to specific commercial activities rather than the underlying nature of the XRP token. The regulator is targeting Ripple’s historical sales of XRP on trading platforms and the use of the token as a payment mechanism [1]. Additionally, the SEC intends to pursue claims against Ripple CEO Brad Garlinghouse and co-founder Chris Larsen for allegedly aiding and abetting these sales, as well as their personal unregistered transactions and employee distributions [1].

The regulator has notably opted against appealing the $125 million monetary penalty imposed by Judge Analisa Torres in August, nor is it challenging the $0 disgorgement ruling [1]. Legal observers, including attorney Fred Rispoli, suggest the SEC likely abandoned the disgorgement issue after recognizing it as a "loser argument" [1].

Legal Outlook and Next Steps

Despite the ongoing litigation, legal experts remain divided on the potential outcomes. Analyst Jeremy Hogan estimates a 90% probability that Ripple will successfully defend at least one of the contested issues, with an 80% chance of prevailing on both major points of the appeal [1]. The final result remains contingent on the specific judges assigned to the appellate panel [1].

Ripple has responded by filing its own cross-appeal notice, with a formal Form C filing expected in the near future [1]. This legal battle follows the SEC’s initial 2020 action, which alleged that Ripple and its executives raised over $1.3 billion through unregistered digital asset offerings [3].

What to watch

• Form C Filing: Monitor the upcoming submission of Ripple’s Form C, which will detail the company's specific arguments in its cross-appeal [1].
• Judicial Assignment: Watch for the appointment of the appellate judges, as their past rulings and interpretations of securities law will likely dictate the trajectory of the remaining claims [1].

The current phase of the litigation marks a transition from debating the fundamental classification of XRP to scrutinizing the specific mechanics of Ripple’s past sales and executive conduct. Whether the appellate court upholds the existing framework or alters the liability for Ripple’s leadership remains the primary open question for the market.