Ripple Labs is gearing up to challenge the U.S. Securities and Exchange Commission’s (SEC) appeal of a recent court ruling that declared its retail sales of XRP did not violate securities laws.
Ripple’s CEO, Brad Garlinghouse, voiced his frustration in an October 3 post on X, vowing to fight the SEC’s efforts to classify XRP as a security. Garlinghouse described the SEC’s appeal as “misguided and infuriating,” emphasizing that Ripple, the crypto industry, and the rule of law had already prevailed in the matter.
The SEC’s appeal, filed on October 2, contests a July 13 ruling by Judge Analisa Torres of the Southern District Court of New York. In that ruling, the court determined that XRP’s sale to retail investors did not constitute an illegal securities offering under the Howey test. However, Ripple’s institutional sales were found to have violated securities laws, leading the SEC to propose a $1.95 billion penalty, which Judge Torres later reduced to $125 million. Ripple was also required to register with the SEC if it wished to offer securities in the future.
Ripple and the SEC reached an agreement for a stay order on September 4, which allowed Ripple to deposit 111% of the $125 million penalty into a secure account while the appeal process played out. This move postponed the payment and signalled the SEC’s intention to pursue an appeal.
Legal experts like Fred Rispoli, founder of Hodl Law, speculate that the appeals process could be lengthy, with a ruling from the Second Circuit appeals court unlikely before early 2026.
Ripple’s Chief Legal Officer, Stuart Aldertoy, called the SEC’s appeal “unsurprising” and accused the agency, along with its chair, Gary Gensler, of engaging in “litigation warfare” against the crypto sector. Aldertoy suggested that Ripple might pursue a cross-appeal if necessary.
Meanwhile, Gensler has faced significant criticism from U.S. lawmakers over the SEC’s aggressive enforcement strategy towards the crypto sector. In particular, the agency’s vague language regarding digital assets, including Ethereum, was called into question in a recent open letter to Gensler himself.
RELATED: Ripple Gains In-Principle Approval to Expand Services in the UAE
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