The U.S. Securities and Exchange Commission (SEC) has filed an appeal in its ongoing case against Ripple, challenging a July 2023 court decision that partially dismissed some claims. Attorney Jeremy Hogan discussed the appeal, explaining that the SEC is only appealing one specific ruling: that the XRP sold to retail investors on exchanges was not considered a security. The SEC is not challenging the finding that no investors were harmed.

Weaknesses in the SEC’s Brief

Hogan finds the SEC’s brief weak and said that much of it simply repeats what the lower court already decided. The SEC is asking the appellate court to rule that it doesn’t need to prove that XRP buyers were aware of Ripple’s efforts to raise the price of XRP. To support this, the SEC points to three past cases, but Hogan argues that these cases don’t really back up the SEC’s position.

Ripple Likely to Challenge SEC’s Argument

Hogan predicts that Ripple will strongly challenge the SEC’s argument in its reply. The SEC’s best case for support is the Aqua-Sonic case, but Hogan said that the SEC has to piece together statements from different parts of the case to make it work, and even then, it doesn’t align well with Ripple’s situation.

SEC’s Missed Opportunity with Evidence

Hogan is also surprised that the SEC didn’t address evidence from XRP buyers who didn’t know about Ripple’s actions, especially given the thousands of affidavits submitted by attorney John Deaton. The SEC’s failure to counter this evidence could hurt their case in the long run.

Possible Impact of the Appeal

If the appeal goes forward and the court upholds the ruling on retail sales, it could create a tough situation for the SEC. They would have to prove that buyers knew about Ripple’s promotional efforts, which would be challenging and time-consuming. Additionally, this appeal might allow Ripple to raise new arguments about what constitutes an “investment contract,” potentially strengthening their position.

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