SEC Loses Again—Appeal of Landmark Ripple Ruling Rejected

The United States Securities and Exchange Commission (SEC) failed to convince a federal judge that its recent, high-profile courtroom loss to crypto firm Ripple Labs should be overturned, according to a court ruling issued Tuesday. 

U.S. District Court judge Analisa Torres—who ruled in July that Ripple’s sale of a cryptocurrency token directly to consumers did not constitute an illegally unregistered securities offering—wrote late Tuesday that the SEC had failed to show in its appeal that the decision was sufficiently faulty or problematic. The regulator was hoping to overturn the ruling before a final judgment is entered in the case next spring. 

The news effectively constitutes another victory—albeit a more minor one—for Ripple, and the market responded. XRP jumped 6.8%, to just over $0.54, before settling to $0.53 at writing, according to CoinGecko.

The SEC will still have the opportunity to appeal Judge Torres’ decision, but only once the case formally concludes after a trial on remaining issues is held next April. 

That news is certainly a disappointment to the SEC, which was hoping to mitigate the damage of its headline-grabbing loss to Ripple by arguing that Torres’ decision created so many “knotty legal problems” that it ought to be reviewed by a federal appeals court before the case is concluded. 

The case has likely received so much breathless attention—both from pro-crypto advocates and from the SEC itself—because it constitutes perhaps the most full-throated refutation to date of the SEC’s current position that most cryptocurrency companies are participating in illegal securities schemes.

Judge Torres, in her July decision, had stated that XRP “is not necessarily a security on its face.”

In the day following that judgment, the crypto market cumulatively soared $73.5 billion, to a market capitalization of $1.3 trillion. XRP skyrocketed over 66% in the same period.

Editor's note: this article has been updated to clarify that XRP is an open-source, decentralized digital asset that is native to the XRP Ledger, which is independent of Ripple.