Ripple’s Chief Legal Officer, Stuart Alderoty, outlines several scenarios that might play out regarding the outcome of the legal dispute between Ripple and the U.S. Securities and Exchange Commission.
In an X post, Alderoty predicts that the U.S. Second Circuit Court of Appeals will either affirm Judge Analisa Torres’s decision or expand upon her ruling. Although he believes SEC hopes for a remand, the chances of that happening is “a remote hope” at best.
“The 2nd Cir. will either affirm Judge Torres or expand her ruling. The best the SEC can hope for (and it’s a remote hope) is a remand,” said Alderoty on his post.
The Chief Legal Officer of Ripple(XRP) further elaborated by saying Judge Torres has clarified that during SEC’s failed interlocutory appeal her initial ruling stood firm, including all of Ripple’s defenses and the significant Fair Notice argument.
The Fair Notice argument poses the question whether a person of “ordinary intelligence” could have understood what was prohibited by law. If the case were to be remanded, this defense, along with other arguments can be brought back into court.
This implies that the SEC may have to argue that Judge Torres does not meet the standard of “ordinary intelligence” due to the fact that she ruled against them. Prompting what Alderoty calls an “awkward” situation.
He went on to compare the case to Herman Melville’s Moby Dick, where SEC Head Gary Gensler plays Captain Ahab, the character obsessed with killing the whale Moby Dick after it took his leg. This time, he adds that the current circumstances resemble court room comedy My Cousin Vinny.
Alderoty confirmed last week in a separate X post that the SEC has not appealed the court’s ruling that XRP is not a security. The SEC filed a Form C civil appeal, asking the court to review the application of the law in a previous summary judgment.
In this case, the SEC asked the court to reconsider the decision to sell XRP tokens on exchanges, as well as personal sales of the token by Ripple CEO Brad Garlinghouse and co-founder Chris Larsen. In an interview with Fox Business, Alderoty stated the case could go on until July 2025. On Oct. 10, Ripple filed its own cross-appeal to challenge the ruling on institutional sales.
The case began in December 2020, when SEC filed a lawsuit against Ripple Labs, accusing the tech company of orchestrating unwarranted sales of XRP tokens worth $1.3 billion, considered by SEC to be unregistered securities. The SEC also alleged that XRP created certain expectations of profit for investors, which meets the criteria for classification as a security.
