Ripple Files Form C to Outline Key Challenges Against SEC in Cross-Appeal

• Ripple’s Form C filing outlines critical legal grounds challenging the SEC’s claims on XRP token sales.
• The appeal emphasizes a “de novo” review to reassess legal interpretations in prior court decisions.
• Ripple contests SEC’s application of the Howey Test, citing inconsistencies and vague guidelines.

Ripple Labs officially filed a Civil Appeal Pre-Argument Statement, also known as Form C, on October 25 to outline the legal grounds it intends to argue in its cross-appeal against the U.S. Securities and Exchange Commission (SEC). This document represents Ripple’s strategy to challenge certain legal interpretations made by the Southern District of New York in its previous ruling regarding XRP’s classification.

Key Legal Grounds Cited in Form C

The Form C serves as a pre-argument statement and is central to Ripple’s challenge. According to Ripple’s Chief Legal Officer Stuart Alderoty, this filing identifies the core issues Ripple intends to dispute, particularly targeting the district court’s application of the Howey Test, a legal benchmark used to evaluate whether an asset qualifies as a security.

Ripple argues that the district court inaccurately applied the Howey Test to XRP transactions, which Ripple claims were structured without expectations of profits derived solely from the company’s efforts. This distinction, Ripple contends, is essential to demonstrating that XRP does not fit within traditional securities frameworks.

A significant element of Ripple’s cross-appeal is its request for a “de novo” review. This legal standard implies that the appellate court should reassess prior rulings without deferring to the lower court’s findings, particularly focusing on how the law was interpreted and applied. By invoking this standard, Ripple seeks a fresh examination of the arguments and evidence to ensure that no procedural or interpretive errors were made.

Ripple’s Form C filing closely follows the SEC’s cross-appeal submission on October 18, where the regulatory agency requested reconsideration of the decision that permitted XRP’s sale on secondary exchanges. The SEC’s appeal also targeted personal XRP transactions by Ripple’s CEO Brad Garlinghouse and co-founder Chris Larsen, arguing that these should be restricted under securities laws.

Additional Legal Questions Raised by Ripple

Besides readdressing XRP’s classification, Ripple’s appeal raises additional questions. It disputes whether the court properly considered Ripple’s claims regarding “fair notice” in light of the SEC’s guidance, which Ripple argues has been inconsistent and overly vague in applying securities regulations to digital assets. Ripple maintains that the SEC’s ambiguous stance on cryptocurrencies lacks a legal basis and has hindered industry clarity.

Further, Ripple questions the necessity of a formal contract under Section 5 of the SEC Act of 1933, where post-sale obligations would enable purchasers to demand and receive profits. This point suggests that Ripple views the SEC’s criteria as overly restrictive and misaligned with current digital asset markets.

Ripple’s Form C also addresses Rule 65 under the Federal Rules of Civil Procedure, which governs injunctions. Ripple argues that an injunction in this case would compel Ripple to “obey the law” without providing specific terms. The company asserts that such a measure lacks clear direction and would not yield significant enforcement benefits.

Ongoing Case and Broader Implications for Crypto Regulation

This latest filing from Ripple arrives as both the SEC and Ripple prepare for a substantial legal dispute, anticipated to shape the U.S. regulatory landscape for digital assets. The SEC initially accused Ripple of selling XRP as an unregistered security, a charge Ripple has vigorously denied. Ripple’s Alderoty remains optimistic, stating that the primary challenge has already been addressed and expressing confidence in the “strong record” Ripple has set forth.