Ripple Labs Files Form C Cross-Appeal to Challenge Key Aspects of SEC Lawsuit

Ripple Labs has moved to challenge the SEC in the US Court of Appeals for the Second Circuit, filing a Form C cross-appeal to contest key aspects

Ripple has filed a cross-appeal in the US Court of Appeals for the Second Circuit to contest key aspects of the SEC lawsuit against the company. This filing comes in response to the SEC's appeal, which followed a favorable district court ruling for Ripple earlier this year.

The SEC had alleged that certain XRP transactions to institutional investors constituted securities, a claim that was partially upheld by the lower court. Ripple's cross-appeal will challenge this ruling and also address the SEC's broader stance on cryptocurrency regulation.

According to Ripple Chief Legal Officer Stuart Alderoty, the appeal will involve a de novo review of all issues, and the SEC will not be able to introduce new evidence or request additional materials from Ripple. The court will only consider the record that has already been set.

The appeal will specifically address whether Ripple's transfers of XRP qualify as securities under the Howey test, which is used to determine if a transaction is an investment contract. This test considers factors such as the investment of money and expectations of profits from the seller's activities.

The cross-appeal also aims to address what Ripple describes as vague and inconsistent statements from the SEC on the application of securities laws to digital assets. The SEC has maintained that the sale of XRP is a security, which would subject Ripple to federal securities regulations.

However, Ripple's filing highlights the lack of clear regulatory guidance, which has left the crypto industry uncertain about how to comply with SEC standards.

The court's decision on this cross-appeal could have broader implications for the cryptocurrency industry. A ruling in favor of Ripple could set a precedent for future cases and potentially limit the SEC's expansive approach to regulating cryptocurrencies.

On the other hand, a decision favoring the SEC might further solidify the regulator's stance on applying securities laws to the industry.