SEC vs. Ripple Case: Appeal in Focus
Saturday’s pullback reflected market uncertainty about the SEC’s appeal strategy. The agency filed its appeal-related opening brief on January 15, just days before Gary Gensler stepped down as Chair. Significantly, the SEC challenged the Programmatic Sales of XRP ruling.
In July 2023, Judge Analisa Torres ruled that programmatic sales of XRP did not satisfy the third prong of the Howey Test. Judge Torres delivered a Final Judgment in August 2024, ordering Ripple to pay a $125 million penalty for illegally selling XRP to institutional investors. Judge Torres based the penalty on a tier-one civil violation of the US Securities Act, with no allegations of fraud or recklessness.
The absence of allegations of fraud is critical, particularly considering acting SEC Chair Mark Uyeda’s recent comments:
“The Commission’s war on crypto must end, including crypto enforcement actions solely based on a failure to register with no allegation of fraud or harm. President Trump and the American electorate have sent a clear message. Starting in 2025, the SEC’s role is to carry out that mandate.”
Acting Chair Uyeda’s stance and incoming SEC Chair Paul Atkins’ views on enforcement may influence the SEC’s approach to the appeal, leaving the possibility of a withdrawal open. Donald Trump’s presidential election win and pro-crypto agenda have paved the way to a more crypto-friendly SEC, signaling a likely shift in the agency’s crypto enforcement strategies.
Ripple must file its appeal-related reply brief by an April 16 deadline, giving the SEC leadership ample time to assess the case. However, continued silence from the SEC could increase XRP’s volatility in the coming months.
