In December 2020, the Securities and Exchange Commission (SEC) initiated a lawsuit against Ripple Labs and its founders. Fast forward to October 2, 2024, the SEC has filed a notice of appeal in the ongoing Ripple lawsuit. In their appeal, the SEC seeks to override a previous ruling by Judge Analisa Torres.
The 2023 judgment which the SEC is appealing against set a standard that Ripple’s XRP secondary sales were not akin to securities sales. This move was, however, expected by legal experts. Judge Angeles proposed that due to the failure of XRP to fulfill all the SEC’s Howey test conditions to qualify as an investment contract, it could not be certified as a security.
As a result, the judge ruled that secondary sales could not be considered as unregistered securities sales. Nonetheless, she added that the early sales of Ripple by the founders to institutional investors were securities sales because of the sales’ mode of execution. When this ruling was made, it was celebrated as a significant win not just for Ripple Labs, but also for the larger cryptocurrency industry.
On the same day the notice of appeal in the Ripple lawsuit was filed by the SEC, it was also announced that their chief enforcement officer, Gubir Grewal, would resign on October 11, 2024. Grewal had come under fire several times for his strict enforcement actions against the cryptocurrency industry, having proposed over 100 individual enforcement measures during his time in office.