Ripple has submitted its pre-argument appeal statement, outlining four issues it seeks to challenge in its cross-appeal against the SEC. This move comes two weeks after Ripple announced that its appeal would leave no stone unturned. Previously, Ripple lost on the issue of institutional sales of XRP, which were classified as investment contracts. As a result, the federal court imposed a fine of $125 million on Ripple and issued an injunction on its future institutional sales.
However, with the SEC appealing the rulings it lost to Ripple, including programmatic sales and other distributions of XRP, Ripple has filed a cross-appeal notice specifically objecting to the decision on institutional sales.
In the filing, Ripple presented four issues it plans to present to the Second Circuit in the appeal. The company called on the Second Circuit to independently review these issues without relying on the district court’s decision.
The first issue Ripple intends to address is whether the Securities Acts of 1933 require an investment contract to have an actual contract, post-sale obligations, and the buyer’s rights to profit from the seller’s efforts.
Secondly, Ripple aims to determine whether the district court was incorrect in declaring that some of its XRP-related transactions meet the three elements of the SEC’s securities test, known as the Howey test. These elements include an investment of money in a common enterprise, with buyers expecting profit from the efforts of others.
Thirdly, Ripple’s cross-appeal will focus on its fair notice defense. Specifically, Ripple questions whether it raised a genuine dispute of fact when it presented evidence of the SEC’s inconsistent guidance and regulatory uncertainty to argue that it was unaware of whether its conduct violated federal securities laws.
Lastly, Ripple seeks to overturn the injunction order to ensure it does not hinder its future business operations. Ripple questions whether the requirements of Rule 65 allow the injunction to simply direct the party being enjoined to obey the law.
In the next steps of the case, the Second Circuit will issue a scheduling order for the briefings after Ripple’s submission of the Form C statement. The SEC will file its opening appeal brief, followed by Ripple’s response. Ripple will then file its cross-appeal brief, and the SEC will respond to the issues raised. The entire briefing process is expected to conclude in July 2025, according to Ripple’s Chief Legal Officer Stuart Alderoty.
Meanwhile, the SEC has requested an extension for filing its principal appeal brief, with a proposed deadline of January 15, 2025. This has prompted XRP proponents to speculate that the SEC is employing delay tactics, similar to what was observed at the district court level. The court has yet to decide on the SEC’s request.
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