The SEC, a major player in the finance game right here in the U.S., filed a lawsuit against the company Ripple Labs, basically saying that the digital coin XRP was fraudulently sold. Do you know anything about this yet? Well, just to give you perspective on things, in the complaint, the SEC said that Ripple had illegally sold XRP without registering the company as a security. All in all, this case is a watershed moment because it might determine how America regulates cryptocurrencies. Now we see both sides of the dispute filing appeals as this part of the legal battle goes on. So, let’s just go over this SEC Ripple Lawsuit Appeal thing and see what really is going on.
History of the SEC’s Lawsuit against Ripple
Before the SEC came up with a detailed accusation of Ripple that the sale of XRP without the required registrations was done, the lawyer of the SEC was already convinced that Ripple was selling unregistered securities. In this very lawsuit, the SEC went on to argue that people were investing in the XRP thing to expect profits, and therefore it could be said to be similar to a stock or bond, which is not right at all. Yet, the Ripple Company believes that XRP is digital money and thus not an investment in Ripple. It can not be thus termed a security.
Ripple stated time and again that XRP works without any complications, like a currency, the way Bitcoin or Ethereum function, and, hence, it should not be under the jurisdiction of the SEC, you know? All in all, they also claimed that the SEC has not provided any clear instructions on how cryptocurrencies should be classified, resulting in this a bit of a confusing legal situation.
Court Rulings and Developments (2020-2023)
Without a doubt, in the year 2023, we saw a bunch of drama regarding this case, like, in July month of 2023, one US District judge named Analisa Torres decided the issue finding that Ripple’s sale of XRP through exchanges to average users did not constitute a violation of the federal US security laws. However, the judge at the same time ruled that Ripple’s sales of XRP to big investors were in breach of the Security law as such transactions amounted to investment contracts and should have been registered with the SEC.
All in all, this verdict turned out to be a half-success for each of the two parties. On the one side, Ripple won the case on the legality of XRP distribution through exchanges to everyday customers, but, on the other side, the company was also found guilty in the case of institutional sales, you know? At the end of all this, Ripple was fined $125 million for these institutional sales, you know, which was just a fraction of the SEC’s original $2 billion claim, which was way higher than this.
Appeals, Market Impact, and Delays
Do you think it ended with the 2023 ruling on this case? Nah, you see, in the year 2024, the SEC took steps to challenge Ripple’s case on the grounds that XRP was not a security when sold to average folks. Furthermore, Ripple too filed an appeal in part to secure the trust in its arguments. And sure, because of all these actions, the XRP price hit an 11% drop clearly indicating that the current lawsuit is responsible for the loss of value. To make matters worse, at the beginning of October, the legal team of Ripple was also delayed by a very serious deadline. This delay could have had a serious impact on this case, luckily though, the court gave them extra time.
