SEC v. Ripple Lawsuit: What to Expect From US SEC Appeals Opening Brief

The U.S. Securities and Exchange Commission (SEC) will file its opening brief regarding appeals in Ripple lawsuit by January 15. The government agency did not challenge Judge Analisa Torres’ decision that XRP is not a security in itself, it appealed almost every argument it lost, including Ripple’s XRP sales on crypto exchanges and personal sales by its executives Brad Garlinghouse and Chris Larsen.

US SEC Under Gary Gensler to File Principal Brief on Jan 15

With SEC Chair Gary Gensler to step down on January 20 and lawyers predicting a potential settlement, some XRP holders questioned whether the agency to file a principal brief in Ripple case.

Experts closely following the SEC v Ripple Labs lawsuit, attorney Jeremy Hogan and former SEC securities lawyer Marc Fagel confirmed the agency will follow the court’s order.

However, they also believe that the Trump administration and incoming SEC Chair Paul Atkins may decide not to pursue the appeal further. Hogan anticipated a last-minute filing and settlement later with Ripple paying $125 million in civil penalties as per an earlier order by Judge Torres. He believes XRP lawsuit may end in April or May.

Challenge to XRP Programmatic Sales Ruling in Ripple Lawsuit

The SEC will argue against the July 13 ruling on XRP programmatic sales by Judge Torres, as per the Civil Appeal Pre-Argument Statement Form C filed. The agency will again claim these are unregistered securities transactions under the 1933 Securities Act.

In an X post on January 8, former SEC lawyer Marc Fagel said “The court agreed with the SEC that Ripple had violated the law, illegally raising over $700m in an unregistered securities offering.” However, he thinks the Ripple lawsuit will not proceed further under the crypto-friendly Trump administration.

XRP Secondary Sales by Ripple, Executives and Employees

Gensler’s SEC to present its arguments on secondary sales as Judge Analisa Torres’s ruling in Ripple Vs SEC lawsuit set didn’t exactly clear whether XRP is a security or commodity. This has further implications for Ripple and the crypto industry.

It’s also important to note that XRP was earlier referred to as “currency” by the U.S. DOJ and Treasury Dept’s FinCEN.

The SEC’s appeal language is mostly on secondary sales. This includes Ripple’s XRP sales on crypto exchanges, distribution to employees and others by the firm, and personal XRP sales by CEO Brad Garlinghouse and co-founder Chris Larsen.

Higher Penalty Than $125 Million and Disgorgement

The SEC will argue for a higher penalty than the $125 million and appeal on reconsidering disgorgement. Similar to its previous arguments such as the penalty is too low to serve as an effective deterrent, the SEC will revisit them.

However, Ripple CLO Stuart Alderoty criticized the SEC for bringing “failed arguments” and wasting taxpayers’ money. The SEC under Gensler failed to provide clarity, including how some digital assets are securities and others are not. Notably, Ripple has already made a strategic shift in its XRP ODL transactions as per an earlier order by Judge Torres

Former SEC lawyer James Farrell even said,

“Ripple was always a good case in 2d bc you have somewhat of a conflict between Rakoff (very well thought of on securities and no fan of SEC) and Torres. That’s why Failla skewed towards Terra / Rakoff.”

What’s Next After Opening Brief Related to Appeals?

Ripple executives’ dinner with President-elect Donald Trump has sparked hopes for good news for the company and its growth in the United States. Recently, Ripple CEO Brad Garlinghouse even pointed out that 75% of job openings are now US-based and the company has signed more US deals in the last six weeks.

While Ripple’s victory in the Second Circuit Court could set a binding precedent for other crypto lawsuits, the parties may proceed with settlement or dismissal under incoming SEC Chair Paul Atkins.