Ripple Labs has formally challenged a recent U.S. SEC ruling, filing a Form C in the United States Court of Appeals for the Second Circuit. The company argues against certain aspects of the district court’s prior decision, focusing on XRP’s classification and broader implications for digital assets.
Ripple’s Chief Legal Officer, Stuart Alderoty, emphasized on X that this case does not question XRP’s security status, a point the SEC hasn’t contested. Alderoty noted, “XRP, like BTC, has clarity and is not classified as a security.”
He emphasized that this appeal would be based on records that were already in existence. Did not add any new proof. “The drama from previous litigation over documents won’t be a factor,” he said, underscoring that the company is keeping on the steep.
The document outlines various key concerns. Ripple plans to deal with, such as the definition of “investment contract” under U.S. securities laws. Ripple is skeptical about whether such a contract requires a definitive agreement with post-sale commitments. Additionally, whether the buyers gain the profits from the issuer’s activities.
Ripple disputes SEC’s use of Howey Test for XRP
The company also challenges the district court’s interpretation of the Howey Test, which the SEC claims some XRP transactions meet. Ripple argues that their case doesn’t align with elements of Howey, specifically in terms of “common enterprise” and profit expectations driven by Ripple’s actions alone.
In addition, Ripple implies the gray areas in the SEC’s regulatory coverage thus, it says that inconsistency was the cause leaving them without any chance to comply with the law under Section 5 of the Securities Act.
Finally, Ripple opposes the imposition of the existing injunction using the argument that it failed to observe Rule 65 of the Federal Rules of Civil Procedure which requires a clear and precise statement.
However, Ripple’s appeal has led to very fundamental questions about the regulatory clarity of digital currencies and how these assets will be treated under U.S. law in the future.
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