On July 13, 2023, Judge Analisa Torres ruled in SEC v. Ripple, deciding that XRP is not a security by itself. The ruling stated that Ripple’s sales of XRP on secondary trading platforms did not count as securities transactions, though direct sales to institutional investors did.

SEC Files Appeal on Ripple’s Secondary Sales

After the summary judgment, on August 18, 2023, the SEC filed an interlocutory appeal, challenging the court’s decision regarding Ripple’s programmatic sales of XRP on secondary platforms. However, on October 3, 2023, Judge Torres denied this appeal, concluding that the court’s decision didn’t present a substantial legal question or significant ground for disagreement.

Related article: XRP Community Buzzes: Will Ripple Settle with the SEC Soon?

Following the dismissal of its appeal, the SEC voluntarily withdrew its charges against Ripple executives, Brad Garlinghouse and Chris Larsen. Legal analysts viewed this move as part of the SEC’s strategy to avoid a prolonged trial and position itself to challenge elements of Judge Torres’ summary judgment in future appeals.

Speculation on SEC’s Next Steps

Despite Ripple’s $125 million civil penalty and a general injunction in August 2023, speculations about a potential SEC appeal have surfaced. Ripple’s September 4 filing, requesting 111% of the monetary judgment be secured in a bank account to stay the case, fueled these rumors.

1/ If they appeal, it will be over whether the programmatic sales constituted securities sales. The court of appeals can answer that question without deciding whether XRP itself is a security. It's a peripheral issue (that's why it was just dicta in the district court's opinion).

— Marc Fagel (@Marc_Fagel) September 8, 2024

Marc Fagel, a former SEC regional director, shared insights on the SEC’s potential appeal strategies. Fagel explained that if the SEC proceeds with an appeal, it would likely focus on whether Ripple’s programmatic XRP sales constituted securities sales. 

Related article: Ripple CLO Highlights Court Decision as Ripple Gears Up to Pay SEC Fine

.He noted the appeals court could address this without ruling on XRP’s security status. When asked if the SEC could directly challenge the court’s dicta on XRP’s status, Fagel emphasized that the SEC might push for the appellate court to revisit this vague aspect of the opinion. 

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— FXCryptoNews (@FXCryptoNews) December 14, 2023

However, he added that it was not a crucial issue, and the Second Circuit would likely avoid taking it up.