The US Securities and Exchange Commission (SEC) filed an appeal in the second instance court. The regulator wants to challenge a federal judge’s ruling that sales of XRP to retail investors do not violate securities laws. This is the latest step in the SEC’s multi-year lawsuit against Ripple Labs, which began in 2020.
The price of XRP, against the backdrop of another attempt by the SEC to prove its case, approached the absolute maximum recorded in January 2018. We tell you why cryptocurrency is growing despite regulatory pressure.
The essence of the appeal
SEC approvesthat in July 2023, District Judge Analisa Torres erroneously ruled that retail sales of XRP through exchanges did not violate US securities law. The regulator insists that all transactions involving the XRP token, including employee compensation and transactions with business partners, fall within the definition of investment contracts under the Howey test.
In a July ruling, Judge Torres said institutional sales of XRP did violate securities law, but retail investors could not know who the seller of the tokens was. Therefore, the participants in such transactions did not enter into an investment contract with Ripple, which means that in this case XRP cannot be a security.
In August 2024, Ripple paid the SEC a fine of $125 million for institutional sales, although the regulator had requested $2 billion.
Ripple’s reaction
Ripple Chief Legal Officer Stuart Alderothy named the SEC’s arguments “repeated failed arguments.” Ripple CEO Brad Garlinghouse in his X post criticized regulator’s actions, pointing out that the agency continues to use the same approaches despite their failures.
XRP is rising
Amid the appeal, XRP rose by 10% in a day. The cryptocurrency is trading above $3 again for the first time since January 2018. The jump occurred against the backdrop of general growth in the cryptocurrency market, including the return of Bitcoin to levels above $100,000. The positive dynamics of XRP could also be supported by investor expectations. Many believe that the SEC’s attempt to reuse arguments that have already failed in court indicates the Commission’s inability to defeat Ripple.
The growth of cryptocurrency could also be supported by speculation about the possible launch of a spot ETF on XRP. According to Santimentlarge holders (with a balance of 1 to 10 million XRP) have purchased 1.4 billion tokens worth $3.8 billion over the past two months. The purchases indicate investor optimism regarding the Ripple cryptocurrency.
At the time of writing, XRP is trading at $3.05. Within 24 hours, the coin rose to $3.18. Let us remind you that the absolute maximum of XRP was recorded on January 7, 2018 at $3.40.
The next stage of the conflict between Ripple and the SEC
The appeal process can take months. This may include, among other things, numerous oral hearings. At the same time, the market reaction indicates investors’ faith in Ripple’s victory.
On January 20, pro-cryptocurrency President Donald Trump will be inaugurated. According to media reports, the politician will begin his term by signing key decisions on the settlement of cryptocurrencies.
A change in the head of the SEC may also contribute to resolving the conflict in favor of Ripple. Let us remember that Commissioner Paul Atkins, loyal to crypto, was proposed for the post of head of the Commission.
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Source: Cryptocurrency
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