On Thursday, October 24, Ripple Labs submitted the Civil Appeal Pre-Argument Statement, known as Form C, in his case before the U.S. Securities and Exchange Commission (SEC). This document outlines the critical issues the company intends to present on appeal, each subject to a de novo standard of review, meaning the appellate court will re-examine the issues without deviating from the lower court’s conclusions.
Ripple’s Four Key Issues on Appeal
The appeal focuses on four main arguments. First, the company challenges the definition of an “investment contract” under Section 5 of the Securities Act of 1933. Ripple states that an investment contract “must have the essential ingredients of (a) a contract, (b) requiring obligations after imposes the sale. obligations on the seller, and (c) which gives the buyer the right to claim and receive profits from the seller’s activities.”
Second, Ripple challenges the trial court’s application of the ruling Howey testderived from the 1946 case SEC v. WJ Howey Co. The company claims the court erred in concluding that some of its XRP transfers met the criteria for an investment contract. Specifically, the company questions whether there was a monetary investment, a joint venture and a reasonable expectation of profit solely from its efforts.
Thirdly, the appeal revives the case “fair notice” defense. The company claims it was not given adequate notice that its conduct violated Section 5, citing evidence of widespread uncertainty about the application of federal securities laws to virtual currencies and other digital assets. Ripple points out that the SEC’s inconsistent and deliberately vague statements contribute to this confusion.
Finally, Ripple disputes the specificity of the order issued against it. The company claims the order does not meet the clarity requirements of Article 65 of the Federal Rules of Civil Procedure because it merely directs the company to “obey the law” without providing detailed guidance. Ripple argues that such an order is too broad and leaves too much room for interpretation, potentially hampering business operations.
Pro-XRP Advocate Jeremy Hogan commented on the call via “Ripple is bringing this issue to the court of appeals primarily for the benefit of the crypto space at large,” he stated. Hogan added that while a victory in this matter might not absolve Ripple of the $105 million judgment against it, it could “cripple the SEC enforcement regime” by requiring an investment contract to be a legal contract .
Hogan also highlighted the reintroduction of the fair notice defense and the company’s challenge to the specificity of the order. He noted, “The most interesting thing to me is that Ripple is appealing whether the order is specific enough when it basically says, ‘Follow the law.’ This seems very common in securities law cases, but in reality it serves no purpose as an injunction. It also indicates that Ripple would rather not have this order hanging over its activities.”
Ripple’s Chief Legal Officer, Stuart Alderoty, as long as more insight into the position of the company via X. He emphasized that this is the case not about whether XRP itself is a security. “XRP is uniquely positioned because it offers clarity (alongside BTC) because it is not classified as a security,” Alderoty said. “The SEC does not dispute this ruling, which stands as the law of the land.”
He assured stakeholders that the appeals court would review the existing record without the SEC introducing new evidence or requiring additional documents. “As we go through this process, remember the SEC’s broader strategy: seek to create distraction and confusion for Ripple and the industry,” he added. “But honestly, it’s just background noise now. The hard part of the battle is behind us. Ripple’s business is growing and getting stronger every day, even as this appeal process plays out.”
In a parallel development, the SEC has requested that the deadline for filing its key brief be set for January 15, 2025. Additionally, pro-XRP counsel has John E. Deaton filed a motion to appear as amicus counsel in the Second Circuit extradition hearing. He told FOX Business journalist Eleanor Terrett: “Senate race or not, I’m not walking away from what I started.”
At the time of writing, XRP was trading at $0.5255.
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