Stuart Alderoty, Chief Legal Officer of Ripple Labs, recently shared insights regarding the ongoing legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC), particularly focusing on the SEC’s appeal of a pivotal court ruling concerning XRP.
In a post on social media platform X, Alderoty outlined two potential outcomes for the appeal and reaffirmed the strength of Ripple’s Fair Notice defense.
Alderoty emphasized that the SEC’s appeal is likely to yield one of two results: “The Second Circuit Court of Appeals may uphold U.S. District Judge Analisa Torres’ ruling from July 2023, which determined that XRP is not classified as a security when sold to retail investors on exchanges.”
The court could expand upon Judge Torres’ decision, potentially providing further clarification on regulatory standards for cryptocurrencies.
Alderoty noted, “The best the SEC can hope for (and it’s a remote hope) is a remand,” which would send the case back to lower courts for further consideration. He also pointed out that during the SEC’s previous unsuccessful interlocutory appeal, Judge Torres made it clear that all aspects of Ripple’s defenses, including the Fair Notice defense, would remain under scrutiny.
This defense argues whether an average person could reasonably understand what the law prohibits. Alderoty quipped that the SEC might have to argue that Judge Torres was not a person of “ordinary intelligence” when she ruled against them, which he described as “awkward.”
The ongoing legal dispute stems from the SEC’s allegations that Ripple’s sale of XRP constituted an unregistered securities offering, claiming the company raised $1.3 billion through these sales. Ripple has consistently maintained that XRP is a cryptocurrency and thus falls outside the SEC’s regulatory jurisdiction.
In light of the SEC’s appeal, Ripple plans to file a cross-appeal to address several other aspects of Judge Torres’ ruling that the agency is contesting.
Ripple supporters have reacted positively to Alderoty’s comments, viewing them as a reinforcement of XRP’s non-security status.
Brad Garlinghouse, CEO of Ripple, on a social media post, emphasize that public interest in cryptocurrency regulation is significant and that voters are concerned about policies that foster innovation and job creation in this sector.
The SEC’s appeal comes amid increasing scrutiny of its regulatory practices under Chair Gary Gensler, who has faced criticism for his enforcement-focused approach to cryptocurrency regulation.