Stuart Alderoty, Ripple’s Chief Legal Officer, has shared his insights on potential outcomes in the ongoing legal dispute between Ripple and the U.S. Securities and Exchange Commission (SEC). In a recent post on social media platform X, Alderoty outlined several scenarios, highlighting that Ripple remains optimistic about the legal process.
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.
But during the SEC’s failed ‘interlocutory’ appeal, Judge Torres made it clear that ‘Howey’ and all of Ripple’s defenses, including Fair Notice,… pic.twitter.com/TWDlJ3bE4d
— Stuart Alderoty (@s_alderoty) October 20, 2024
According to Alderoty, the U.S. Second Circuit Court of Appeals is expected to uphold Judge Analisa Torres’s decision or expand upon her ruling. He downplayed the SEC’s hopes for a remand of the case, stating that such an outcome was “a remote hope” at best. “The 2nd Cir. will affirm Judge Torres or expand her ruling. The best the SEC can hope for (and it’s a remote hope) is a remand,” Alderoty wrote.
Ripple’s Fair Notice Defense Could Prove Awkward for the SEC
Alderoty explained that Judge Torres’s past rulings affirmed Ripple’s defenses, especially the critical Fair Notice argument. He asserted that Judge Torres’s other rulings also stood fast. Repeatedly during the trial, Ripple has hammered on the Fair Notice defense by asking whether a person of “ordinary intelligence” could have known what was prohibited by law. Alderoty said if the case is remanded, Ripple could keep bringing this argument and similar arguments back to court, a scenario he characterized as awkward for the SEC.
No surprises here — once again it’s been made clear. The Court’s ruling that “XRP is not a security” is NOT being appealed. That decision stands as the law of the land.
Stay tuned for Ripple’s Form C to be filed next week. https://t.co/m9molUGSBv
— Stuart Alderoty (@s_alderoty) October 18, 2024
Alderoty buoyed a comparison for SEC Chair Gary Gensler to Captain Ahab of Herman Melville’s ‘Moby Dick’, driving the SEC chair as if he were chasing the mythical whale Ripple. He also compared the court drama ‘My Cousin Vinny’, giving the legal battle some comedic undertones.
Ripple and SEC Clash Over XRP’s Security Status
Alderoty confirmed that the SEC declined to appeal the court’s ruling that XRP, Ripple’s crypto coin, is not a security. Despite that, the SEC did appeal its previous judgment civilly, which included requesting the court revisit its previous judgment concerning sales of XRP tokens made by Ripple CEO Brad Garlinghouse and co-founder Chris Larsen. On October 10, Ripple then filed its cross-appeal of that ruling against the inclusion of institutional sales of XRP.
The SEC lawsuit kicked off in December 2020 and has been contentious since then. According to the SEC, XRP rises to security status because investors are expected to benefit from making money with it.
Although Alderoty didn’t specify, he suggested in an interview with Fox Business that the case could continue through at least July 2025, continuing a long battle between the fintech firm and the regulatory agency. Ripple’s latest courtroom jousts are designed to secure their place in the crypto-verse, and the case may have implications for an entire industry.
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