The U.S. Securities and Exchange Commission (SEC) has decided to appeal a landmark court ruling that classified XRP tokens as non-security, an appeal that has had a direct impact on the price of XRP tokens.
The appeals court’s decision could reshape the regulatory framework for cryptocurrency assets.
Ripple CEO Criticizes SEC Appeal
In July 2023, U.S. District Judge Analysa Torres ruled that XRP distributed by Ripple Labs did not meet the criteria for securities as defined by the SEC’s subtest . The ruling exempted Ripple Labs from strict securities regulations for a $75.7 million transaction.
However, the SEC is challenging that ruling and is appealing it to the 2nd U.S. Circuit Court of Appeals in Manhattan. The agency is seeking to overturn the decision, which could have profound implications for the regulation and trading of cryptocurrencies.
This development has caused the price of the XRP token to plummet. In the last 24 hours, XRP has fallen by 11.22% and is currently trading at $0.5339.
Read more: Ripple (XRP) Price Prediction 2024/2025/2030
Judge Torres’ ruling partially ruled in favor of the SEC, meaning that $72.8 million worth of XRP sold to institutional investors must comply with securities laws. Ripple was subsequently fined $125 million in August 2024 , but that fine was suspended pending the outcome of the appeal.
Ripple CEO Brad Garlinghouse has publicly criticized the SEC’s decision to appeal, arguing that the initial ruling should have resolved the issue and accusing the SEC of wasting taxpayer money by continuing to litigate Ripple.
“We will fight in court as long as necessary, but let me be clear: XRP’s non-security status is legally established today, and that will not change, despite these misguided and frustrating appeals,” Garlinghouse said .
This ongoing legal battle goes beyond Ripple or XRP. It is emblematic of a broader debate over the classification and regulatory status of cryptocurrencies. A future decision by the Second Circuit could impact Ripple’s operations and set a legal precedent for the treatment of other cryptocurrencies under U.S. law.
In a separate development, the SEC announced the retirement of Gurbir S. Grewal, Director of the Division of Enforcement, effective October 11, 2024. Sanjay Wadhwa has been appointed Acting Director and Sam Walden has been appointed Acting Deputy Director.
During Grewal’s leadership, the SEC initiated more than 100 enforcement actions against major players such as Binance and Coinbase. SEC Chairman Gary Gensler praised Grewal’s contributions and emphasized that his leadership was essential to enforcing securities laws.
Read more: Who is Gary Gensler? Everything you need to know about the SEC Chairman
“Grewal thought every day about how to protect investors and help market participants comply with time-tested securities laws. He led a department that acted without fear or bias, following the facts and the law,” Gensler said .
