Key Insights:
Christian A. Larsen, co-founder of Ripple, has officially filed a notice of appearance in response to the SEC's appeal.
The SEC appealed a ruling from the Southern District of New York (SDNY), seeking to challenge the court's decision on XRP's legal status.
Ripple and the SEC may face another prolonged legal battle over whether XRP qualifies as a security.
A potential trial could hinder XRP's recent market gains during the altcoin season.
Chris Larsen Responds to SEC Appeal
Ripple Labs co-founder, Christian A. Larsen, has filed a notice of appearance in the Appellate Court following the SEC's appeal of the previous judgment made by the Southern District Court of New York (SDNY).
The SEC's appeal argues that the district court overstepped its jurisdiction in its ruling. However, Ripple's lead attorney, Stuart Alderoty, asserted that the appeal would not impact XRP's non-security status.
Ripple vs SEC: Previous Court Rulings
In the earlier SDNY decision, Ripple Labs saw a significant reduction in penalties. While the court held that XRP was not a security, the ruling favored Ripple both in institutional and retail sales cases. Ripple was fined $125 million for selling XRP to institutional investors, a penalty much lower than the SEC’s initial $2 billion demand.
Previously, in August 2023, the court ruled in Ripple’s favor regarding retail sales, affirming that XRP did not meet the criteria of the Howey Test, and thus was not a security.
SEC's Jurisdictional Challenge
Despite the ruling, the SEC contested the decision on institutional sales, claiming the court improperly intervened in its regulatory authority. The SEC's appeal reiterated familiar accusations that Ripple executives engaged in security sales by soliciting corporate investments.
Ripple's attorney, Stuart Alderoty, remains confident that XRP's non-security status will not be affected by the appeal.
FIT-21 Act and Its Implications
The FIT-21 Act, passed by the U.S. Congress, establishes separate regulatory frameworks for cryptocurrencies based on centralization. Cryptos with more than 20% of their supply controlled by a single entity would fall under SEC oversight, while decentralized ones would be regulated by the CFTC.
However, the legal debate between Ripple and the SEC focuses on whether XRP is a security, meaning the FIT-21 Act offers no clear resolution for this ongoing dispute. If XRP is deemed a security, it will be governed by the SEC’s regulations, not FIT-21.
Impact on XRP's Price
XRP Price Trend in the Last 30 Days
CoinMarketCap
XRP’s price hit a local high of $0.66 on October 2, 2024, before dropping to $0.52, likely due to news of the SEC's appeal, which was officially filed by October 16. If the case continues, XRP's price may stay depressed until SEC Chairman Gary Gensler's expected departure in April 2026.
The ongoing legal battle has significantly impacted XRP's performance. For instance, while Bitcoin saw a 312% gain and Solana surged by 1000%, XRP has lagged. Without the weight of the legal dispute, XRP could have reached the $2 to $5 range by early 2024, supported by its strong market presence in tokenization and remittances across Latin America and North America.
Future Outlook
If the case proceeds to trial, XRP’s price could remain stagnant throughout the altcoin season, with the trial potentially dragging into 2026. However, should the market recognize Ripple’s influence in key sectors such as real-world assets (RWA), cross-border payments, and liquidity solutions, XRP's value could surge before the case concludes.
While a full trial seems unlikely, the uncertainty surrounding the legal proceedings tempers long-term predictions for XRP's future performance.
