SEC Seeks to Overturn Ruling in Ripple Case

On October 2, the Securities and Exchange Commission (SEC) submitted a notice of appeal in the ongoing Ripple lawsuit, aiming to overturn a prior ruling made by Judge Analisa Torres.

Legal analysts had long expected the SEC to challenge the 2023 decision, which clarified that secondary sales of Ripple’s XRP tokens were not considered securities transactions.

Judge Torres concluded that XRP, by itself, did not meet the requirements outlined in the SEC’s Howey test, which is used to classify a financial asset as an investment contract. As a result, the judge determined that secondary XRP sales could not be classified as unregistered securities.

However, Torres also ruled that initial sales of XRP by Ripple’s founders to institutional investors did qualify as securities transactions, due to how they were conducted. At the time, the ruling was seen as a major victory for Ripple Labs and the broader cryptocurrency sector.

Securities and Exchange Commission enforcement chief steps down

On the same day that the SEC submitted its appeal notice in the Ripple case, the agency revealed that its head of enforcement, Gubir Grewal, would be stepping down on October 11.

Grewal has faced criticism for his aggressive enforcement actions against the cryptocurrency industry, with over 100 enforcement cases initiated under his leadership. Although the SEC has yet to appoint a permanent replacement, Sanjay Wadhwa, the current deputy director of the enforcement division, has been named interim chief enforcement director.

Bitwise files for XRP ETF trust

There are signs that institutional interest in XRP is rising. According to a recent report, Bitwise filed for an XRP ETF trust in Delaware on September 30. The filing, listed on the Delaware Division of Corporations website, signals Bitwise’s interest in exploring an XRP exchange-traded fund (ETF).

However, the filing in Delaware does not equate to SEC approval, and with the SEC’s current legal appeal, approval for an XRP ETF may face delays.

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