XRP’s Value Plummets Following SEC Appeal
XRP’s Market Reaction
XRP experienced a significant downturn on Thursday, with its value declining by over 10%. This sharp drop comes in response to the U.S. Securities and Exchange Commission (SEC) filing an appeal against a recent court ruling in its long-standing lawsuit against Ripple Labs. The ruling in question, delivered by Judge Analisa Torres on August 7, resulted in a $125 million penalty for Ripple, a stark contrast to the SEC’s original demand of $2 billion.
Details of the Court Ruling
The court’s ruling established that Ripple’s sales of XRP to institutional investors constituted securities transactions, which led to the imposed penalty. However, Judge Torres highlighted that these transactions were neither fraudulent nor malicious, as there were no proven claims of fraud or financial harm. This ruling provided important clarification, indicating that while some XRP transactions fall under securities regulation, XRP itself is not deemed an inherent security, presenting crucial guidance for Ripple and the cryptocurrency industry as a whole.
SEC’s Appeal Strategy
The SEC has taken its case to the Second Circuit Court of Appeals, expressing a strong intent to dispute the district court’s ruling. The SEC argues that the decision contradicts established Supreme Court precedents and long-standing securities laws. The agency contends that regardless of the nature of the transaction—whether it involves institutional or retail sales—XRP should be classified as a security across the board. This appeal signifies the SEC’s determination to challenge the foundational aspects of the prior ruling.
Ripple’s Response to the SEC
In response to the SEC’s appeal, Ripple’s Chief Legal Officer, Stuart Alderoty, described the agency’s actions as “disappointing but not surprising.” He articulated that the appeal only extends what he called a “complete embarrassment” for the SEC, having previously refuted the agency’s claims of recklessness on Ripple’s part. Alderoty emphasized that there were no allegations of fraud and that no victims or financial losses had been identified. Ripple’s CEO, Brad Garlinghouse, echoed this sentiment by asserting the company’s readiness to defend its stance in court for as long as necessary, stating that XRP’s designation as a non-security remains legally valid despite the SEC’s continued challenges.
The Broader Implications
Garlinghouse criticized SEC Chairman Gary Gensler and the agency for their persistence in pursuing the case, suggesting that the SEC has failed to protect investors and has instead damaged its own credibility and reputation. At a recent conference in Seoul, South Korea, Garlinghouse expressed skepticism regarding the SEC’s chances of successfully overturning the pivotal decision that “XRP is not, in and of itself, a security.” His remarks underscore the contentious nature of the ongoing legal battle and the broader regulatory landscape facing cryptocurrencies.