Ripple vs. SEC: Will the SEC Appeal the Ripple XRP Case Ruling?

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In a recent episode of the Thinking Crypto Podcast, host Tony Edward talked with Attorney Fred Rispoli about the latest developments in the Ripple vs. SEC case. They discussed what the court’s decision meant and what could happen next, will the SEC appeal the Ripple XRP Case Ruling?

Ripple vs. SEC Case 

On August 7th, District Judge Analisa Torres from the Southern District of New York made a key ruling, bringing the SEC’s case against Ripple to an end. However, the court has ordered Ripple to pay $125 million in fines and told them to avoid breaking securities laws in the future. 

This case started in November 2020 when the SEC accused Ripple of raising $1.3 billion through unregistered sales of XRP tokens. Interestingly, the fine is much less than the $1.9 billion the SEC initially wanted, although they might appeal the decision.

Can Ripple Still Sell XRP to U.S. Institutions?

During the podcast, Tony Edward asked Fred Rispoli if Ripple could still sell XRP to U.S. institutions. Rispoli said that Ripple might still be able to sell XRP both in the U.S. and abroad, but they need to be careful. This issue goes back to an earlier ruling that said institutional sales were illegal. The judge included On-Demand Liquidity (ODL) sales in this category without much explanation.

Rispoli noted that Ripple could argue that their current sales are different from those that got them in trouble before, suggesting they aren’t investment contracts. While the SEC might challenge this, Ripple could say that these sales are not banned under the recent ruling.

Will the SEC Appeal the XRP Case Ruling?

The discussion also touched on the possibility of the SEC appealing the Ripple XRP case ruling. Rispoli mentioned that while it’s a close call, he thinks it’s unlikely either side will appeal. He explained that an appeal might not be smart for the SEC because the case’s weak facts could be examined closely, possibly leading to outcomes they don’t want.

Rispoli highlighted that the judge’s fine decision was balanced; if it were too high or too low, it might have led to an appeal. The SEC might struggle with an appeal, especially since the second circuit has allowed for zero disgorgement. This circuit, where the SEC often files cases, might not support an appeal from the SEC.

Ripple could argue that important contract details were missed, but this might not guarantee a win. 

With the SEC having until early October to decide whether to appeal, it’s still unclear what they will do next.