XRP, the cryptocurrency associated with Ripple, saw a drop in value of over 10% after the SEC filed an appeal against the court’s decision in its lawsuit against Ripple. The ruling imposed a $125 million penalty on Ripple, much less than the SEC’s initial demand of $2 billion. The court determined that Ripple’s XRP sales to institutional investors were securities transactions, leading to the penalty. However, the court also clarified that while certain XRP transactions are considered securities, XRP itself is not inherently a security, providing important regulatory guidance for Ripple and the industry as a whole.
The SEC’s appeal aims to have XRP classified as a security in all transactions, whether institutional or retail. It argues that XRP’s classification should not vary based on the type of transaction. Ripple’s chief legal officer, Stuart Alderoty, criticized the appeal, calling it “disappointing, but not surprising.” He stated that the court had already rejected the SEC’s claims of recklessness, fraud, and financial harm, highlighting the lack of evidence supporting these allegations. Ripple CEO Brad Garlinghouse expressed readiness to defend the company’s position in court, emphasizing that XRP’s status as a non-security is the current law and will not change despite the appeal.
During a speech at KBW2024 in Seoul, South Korea, Garlinghouse discussed the lawsuit and expressed uncertainty about the SEC’s appeal. He maintained that there was no valid way for the regulator to overturn the fundamental decision that XRP is not considered a security in itself. Garlinghouse criticized the SEC’s handling of the case, stating that the prolonged legal battle has not protected investors but damaged the credibility and reputation of the agency. He emphasized that the SEC should have moved on from the case long ago, as the court’s ruling has established XRP’s non-security status.
Overall, the ongoing legal battle between Ripple and the SEC regarding the classification of XRP as a security continues to impact the cryptocurrency’s value and market sentiment. The court’s ruling and the subsequent appeal by the SEC highlight the complexities of regulating cryptocurrencies and the need for clear guidelines in the industry. As Ripple and the SEC continue to clash over XRP’s status, investors and market participants remain uncertain about the future implications of the lawsuit on both the company and the broader cryptocurrency market. The outcome of the appeal and its potential effects on XRP’s classification will be closely monitored by stakeholders in the crypto community.
