The US Securities and Exchange Commission (SEC) has officially filed an appeal in the ongoing lawsuit against Ripple, taking the case to the next stage.

On Thursday evening, the SEC filed a document, known as the "Civil Appeal Pre-Argument Statement," or Form C, in its case against Ripple Labs. On Oct. 2, the SEC officially notified the court of the Southern District of New York that it is appealing certain portions of Judge Torres' July 2023 ruling. However, specific reasons for the appeal had not yet been confirmed.

The ruling by Judge Torres last year fell partly in Ripple's favor. It ruled that selling XRP to retail investors on crypto exchanges did not violate U.S. securities laws. This was considered an important milestone in the crypto world because it indicated that other crypto tokens might not be considered securities either.

The broader crypto sector can breathe a sigh of relief: the appeal filed yesterday does not challenge Judge Torres' decision on the status of XRP as a security. Instead, the SEC is focusing on other important aspects of the ruling.

The appeal focuses instead on Ripple's offerings and sales of XRP on digital trading platforms, as well as the personal sales of Ripple executives Brad Garlinghouse and Chris Larsen. The court had previously determined that no violation of securities laws had occurred in these cases. However, the SEC also questioned whether Ripple's distributions of XRP in exchange for non-monetary quid pro quos violated securities laws.

Court re-evaluation of Ripple Labs

Ripple's institutional sales of XRP to large investors have already been deemed securities law violations by the competent court. As a result, Ripple Labs was imposed a civil penalty of $125 million. The SEC had initially demanded a $2 billion fine.

No surprises here — once again it’s been made clear. The Court’s ruling that “XRP is not a security” is NOT being appealed. That decision stands as the law of the land.

Stay tuned for Ripple’s Form C to be filed next week. https://t.co/m9molUGSBv
— Stuart Alderoty (@s_alderoty) October 18, 2024

The appeal will now be reviewed "de novo" at the SEC's request. This means that the court will completely reevaluate the legal issues without regard to Judge Torres' previous interpretations.

Stuart Alderoty, Chief Legal Officer of Ripple, announced today on X (formerly Twitter) that his team will also file a Form C next week. He indicated that the "unsurprisingly" was that XRP is still considered "no effect."