Ripple vs. SEC: Can Ripple Still Face Defeat? Legal Expert Analysis

Jeremy Hogan, partner at Hogan & Hogan, has predicted that there will be no “final glorious victory” for the US Securities and Exchange Commission in the US Court of Appeals for the Second Circuit.  

The SEC’s attempts to appeal the case might potentially lead to disastrous outcomes for the agency, according to Hogan.

Even if the regulator somehow manages to win the appeal, the case would still come back down to the trial court since there would be a need for further factual determination.

In a significant blow to the SEC, Judge Analisa Torres determined that the XRP token was not a security when sold to retail investors on exchanges in July 2023. However, Torres also ruled that Ripple did violate federal securities laws with its XRP sales to institutional investors.

Last month, former SEC Division Chief Kristina Littman opined that the SEC might let the Ripple ruling just “stay there” as a district court opinion without potentially elevating it to a circuit level.

As reported by U.Today, the Ripple ruling was explicitly rejected by U.S. District Judge Jed Rakoff, who presided over the SEC’s case against Terraform Labs. Judge Rakoff claimed that the legal status of a token should not be determined based on whether it was to institutional or retail investors. This logic was also adopted in the Coinbase decision in a win for the SEC.

Hence, it remains to be seen whether the SEC will still choose to appeal the case and elevate the Torres ruling despite scoring several wins. For now, the case remains in the remedies phase, with Ripple attempting to substantially reduce fines and penalties.

Last July, Gensler hinted that the SEC could end up appealing the Torres ruling. “We’re still looking at it and assessing,” he said back then.