The United States Court of Appeal for the Second Circuit has ordered the U.S. Securities and Exchange Commission (SEC) to file its principal appeal brief against Ripple Labs before January 15, 2025.
This comes after the agency requested a deadline extension until the said date.
No More Delays
Initially, the SEC missed its submission deadline for the appeal brief, with defense lawyer James K. Filan revealing the regulator’s official petition to delay the filing. On November 1, the former federal prosecutor shared the Court of Appeal’s decision on the SEC’s request.
Per the document shown in Filan’s post, while the court approved the regulator’s request, it indicated that if the agency fails to file its brief by January 15, the appeal will be effectively dismissed. The court also stated that any further request for an extension or other relief would not change the filing deadline.
The legal struggle stems from a landmark ruling in 2023 by Judge Analisa Torres which found that sales of Ripple’s XRP token on exchanges did not meet the criteria for investment contracts under the Howey Test.
However, the judge also ordered Ripple to pay a $125 million fine for institutional sales of XRP, which she deemed were a violation of securities laws.
In response, the SEC announced that it would appeal parts of the ruling, finally filing its pre-argument statement on October 17. In the document, the agency outlined several issues it would contest, including Ripple’s programmatic sales of XRP on crypto trading platforms, as well as personal sales by the payments company’s top executives Brad Garlinghouse and Christian Larsen.
Ripple’s Cross-Appeal
Ripple countered the SEC’s move with a cross-appeal of its own against specific parts of Judge Torres’s decision.
The appeal, which experts suggest could redefine digital asset regulation, raised four essential points, including a focus on the definition of “investment contract” under the Securities Act of 1933. The company contends that such a contract requires a formal agreement with post-sale obligations and a guarantee of profit for the buyer, a criterion they argue doesn’t fit their XRP transactions.
Ripple also targeted the “fair notice” doctrine, claiming the SEC and other regulators failed to provide adequate guidance on the status of cryptocurrencies under federal law. It insisted that it made efforts to inform XRP buyers about this regulatory uncertainty.
The case, which has stretched on for more than four years, has seen numerous delays, causing frustration among the XRP community.
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