XRP price is under pressure, but with the United States SEC appealing, Ripple might have to pay even more penalty and be barred from expanding.
It has been nearly four rough years for Ripple and Ripple Labs, the developers of the XRP Ledger (XRPL).
In December 2020, the United States Securities and Exchange Commission (SEC) unexpectedly sued Ripple and its executives, alleging they illegally raised over $1 billion in their ICO by selling unregistered securities in XRP.
XRP is the native currency of XRP Ledger. The blockchain company Ripple uses the coin in its On-Demand Liquidity (ODL) solution.
Ripple Versus United States SEC Court Battles
The lawsuit forced Ripple, a for-profit, to dissociate from XRP and create Ripple Labs, a non-profit developing the XRP Ledger. XRP operates as a coin in the scalable blockchain.
Although the presiding Judge ruled that retail trading of XRP in the secondary markets doesn’t entail trading in securities, the United States SEC appealed.
The ruling in 2023 was a massive win for XRP, Ripple, and Ripple Labs. However, the regulator wasn’t satisfied since the Judge also said all XRP sales directly by Ripple to institutions involved in trading securities.
The appeal was made, and the Judge penalized Ripple $125 million in early August but did not issue an injunction barring Ripple from selling XRP to institutions.
In the regulator’s view, any XRP sale by Ripple, whether to retailers or institutions, qualifies the token as a security.
United States SEC Appeals: What Does This Mean for Ripple?
As things stand, the legal drama will continue until next year after the United States SEC filed a notice to appeal on October 2.
The regulator is challenging the Judge’s recent ruling that selling XRP in the secondary markets, like exchanges, to retailers doesn’t constitute a securities offering.
With this appeal, the United States SEC wants to overturn the previous decision made in July 2023.
Of note is that they will look to establish a precedent that XRP sales demand buyers to register with the Commission.
Crucially, the regulator wants the court to declare institutional sales as offering unregistered securities. In their view, an injunction preventing Ripple from doing this will be appropriate.
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Will The Regulator Win? Expected Ramifications
The agency’s opening brief is due on December 2, exactly two months after filing.
On the other hand, Ripple lawyers will file a cross-appeal arguing against the appeal.
All the same, oral arguments start in late Q3 2025 or early October 2025. After that, the Second Circuit Court of Appeals will make a ruling.
Ripple will have to pay more penalties if the regulator wins, even the $2 billion the Commission sought. Moreover, the court will set a precedent that will likely impact other crypto assets and issuers.
Should the United States SEC win, a blow would be the prohibition of Ripple from selling XRP to institutions. In this way, Ripple would be stopped on their part of global expansions.
(XRPUSDT)
XRP price is currently under pressure and trending close to $0.50. The coin is also down nearly -17% from September highs of around $0.66.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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