On Thursday, October 24, Ripple Labs foot A pre-argument statement for a civil appeal, known as Form C, in your case before the U.S. Securities and Exchange Commission (SEC). This document outlines the critical issues the company intends to raise on appeal, each of which is subject to a new standard of review, meaning the appellate court will reconsider the issues without reference to the trial court’s conclusions.
Ripple’s four main issues on appeal
The appeal focuses on four main arguments. First, the company challenges the definition of “investment contract” under Section 5 of the Securities Exchange Act of 1933. Ripple asserts that an investment contract “must contain the essential components of (a) a contract, and (b) a post-sale mandate.” obligations on the seller, and (c) gives the buyer the right to claim and receive profits from the seller’s activities.
Second, Ripple takes issue with the district court’s application of the Howey test, derived from the 1946 Supreme Court case SEC v. W.J. Howey Co. The company says the court erred in concluding that some of its XRP transfers met the criteria for an investment contract. Specifically, the company challenges whether there is an investment of funds, a joint venture, or a reasonable expectation of profits solely from its efforts.
Third, the appeal revives the “fair notice” defence. The company asserts that it lacked adequate notice that its conduct violated Section 5, citing evidence of widespread uncertainty about the application of federal securities laws to virtual currencies and other digital assets. Ripple points to inconsistent and intentionally vague SEC statements as contributing to this confusion.
Finally, Ripple challenges the privacy of the injunction against it. The company asserts that the injunction does not meet the clarity requirements of Rule 65 of the Federal Rules of Civil Procedure, because it only directs the company to “comply with the law” without providing detailed guidance. Ripple says such an injunction is too broad and leaves too much room for interpretation, which could hamper its business operations.
Pro-XRP lawyer Jeremy Hogan Comment on the appeal via X, noting that Ripple’s challenge to the definition of investment contract could have far-reaching implications for the cryptocurrency industry. “Ripple is bringing this case to the Court of Appeal primarily for the benefit of the cryptocurrency space in general,” he said. Hogan added that while a win in this case may not absolve Ripple of the $105 million judgment against it, it could “cripple the SEC’s enforcement system” by requiring that an investment contract be a legal contract.
Hogan also highlighted the reintroduction of the fair notice defense and the company’s challenge to the privacy of the injunction. He commented: “What is most interesting to me is that Ripple is asking whether the injunction is specific enough when it basically says ‘follow the law.’ This seems very common in securities law cases but it really makes no sense as an injunction.” “It also indicates that Ripple would prefer not to have this injunction hanging over its business.”
Stuart Alderotti, Chief Legal Officer at Ripple available More insight into the company’s position via X. He stressed that the issue is not about whether XRP itself is a security. “XRP is in a unique position in that it has the clarity (along with BTC) of not being classified as a security,” Alderotti stated. “The SEC is not challenging this ruling, which is the law of the land.”
He reassured stakeholders that the appellate court would review the existing record without the SEC submitting new evidence or requiring additional documents. “As we go through this process, please remember the SEC’s broader strategy: trying to create distraction and confusion for Ripple and the industry,” he added. “But honestly, it’s just background noise now. The hard part of the battle is behind us. Ripple’s business is growing and getting stronger every day even as this appeals process continues.”
In a parallel development, the SEC requested a deadline for filing its key summary of January 15, 2025. Additionally, pro-XRP attorney John E. Deaton, motioned to appear as amicus counsel in extradition to the Second Circuit. he He said FOX Business journalist Eleanor Terrett, “Whether I’m running for Senate or not, I’m not walking away from what I started.”
At press time, XRP was trading at $0.5255.
Featured image created with DALL.E, a chart from TradingView.com
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