SEC’s Ripple Appeal Does Not Target XRP Secondary Sales, Lawyer Explains
Attorney Bill Morgan has provided clarification on the SEC’s recent appeal in the Ripple Labs case, stating that it does not pertain to secondary market sales of XRP made by individual investors. The appeal specifically focuses on Ripple’s programmatic sales and distributions of XRP, rather than transactions conducted on exchanges by retail investors.
This clarification has been issued following the SEC’s filing of an appeal notice on October 2nd, in response to Judge Analisa Torres’s ruling in July.
The confusion surrounding the scope of the SEC’s appeal is due to the fact that Judge Analisa Torres did not address secondary sales of XRP in her ruling. These secondary sales typically involve transactions carried out by individuals on exchanges, such as retail investors trading XRP. The judge’s ruling solely pertained to Ripple’s programmatic sales of XRP, where the company used automated processes to sell the cryptocurrency on the open market.
Morgan emphasized that secondary sales were not a part of the original ruling and therefore cannot be included in the appeal. The SEC’s primary focus is on Ripple’s direct sales and the potential penalties associated with those sales.
It is important to clarify this distinction, as some commentators mistakenly believe that secondary sales of XRP and Ripple’s programmatic sales are one and the same.
In addition to Morgan’s clarification, attorney Jeremy Hogan stated that the SEC’s decision to appeal is a risky move for the regulator. Hogan believes that the SEC’s chances of winning the appeal are low due to the fact-heavy nature of Judge Torres’s ruling. Even if the SEC were to succeed, Hogan believes it would result in additional financial penalties for Ripple without altering the legal status of XRP or its use by Ripple.
Hogan also highlighted that the SEC’s appeal will not challenge the ruling that XRP itself is not a security. The SEC is unable to appeal this aspect of the ruling.
The appeal process is expected to prolong the legal battle until late 2025 or early 2026, delaying a final resolution.
At the same time, asset manager Bitwise has filed for an XRP ETF with the SEC, aiming to provide institutional investors access to XRP. However, concerns have been raised about the approval of the XRP ETF, considering the SEC’s ongoing legal dispute with Ripple. Some believe that the ongoing appeal by the SEC could delay the approval of an XRP ETF by 6 to 18 months, similar to the delays experienced with Bitcoin spot ETFs. However, others argue that the appeal does not involve XRP’s secondary market sales and therefore would not impact the approval of an XRP ETF.
Disclaimer: The information provided in this article is for informational and educational purposes only. It does not constitute financial advice or advice of any kind. Readers are advised to exercise caution and seek professional advice before making any investment decisions.