The U.S. Securities and Exchange Commission (SEC) continues its legal battle with Ripple Labs by filing a new appeal against the July 2023 court decision.
SEC Challenges Court's Ruling
The SEC has officially challenged the court's decision, which partially favored Ripple, ruling that XRP sales to retail investors through exchanges didn't violate federal securities laws. The SEC argues that Ripple's marketing strategies created profit expectations among investors, thus turning XRP into an investment contract under the Howey Test.
SEC’s Focus on Ripple’s Promotional Efforts
A key part of the SEC’s argument lies in Ripple’s promotional efforts. The agency asserts that Ripple’s activities were designed to increase demand for XRP and create a perception of value among investors. The SEC claims Ripple’s marketing generated expectations that XRP would increase in value, making it function like a security.
The Dispute Over 'Investment Contracts'
At the heart of this case is whether Ripple’s sales of XRP should be classified as investment contracts. The SEC argues all XRP transactions qualify as securities under the Howey Test. Ripple, however, maintains that XRP is a digital currency not subject to securities laws.
The SEC's appeal aims to overturn the court's final judgment and establish that all XRP sales are unregistered securities offerings. If successful, the case would return to court for further proceedings against Ripple.
