US SEC Appeals Ripple Case as Director of Enforcement Steps Down

The United States Securities and Exchange Commission (SEC) has filed an appeal against Judge Analisa Torres’ summary judgment in its lawsuit against the digital asset infrastructure provider Ripple Labs.

According to a filing by the SEC, the agency submitted the notice of appeal to the United States Court of Appeals for the Second Circuit on October 2, 2024. 

SEC Files Appeal Against Ripple Ruling

Less than two months ago, Judge Torres granted the SEC’s motion for remedies in its case against Ripple in part and denied it in part. She banned Ripple from further violations of U.S. securities and ordered the crypto company to pay a civil penalty of $125 million out of the $2 billion initially demanded by the SEC.

A year before the final judgment, the judge had ruled that the programmatic sales of XRP, Ripple’s native token, to retail clients through centralized exchanges did not violate securities laws. The decision partially threw out the SEC’s case against Ripple, which accused the firm of violating securities laws by offering and selling unregistered securities (XRP). 

Although Judge Torres ruled that Ripple violated regulations by directly selling XRP to institutional clients, the case between the company and the SEC had sparked a years-long debate over cryptocurrencies being securities or not. The SEC sued Ripple in December 2020.

It remains to be seen if the Appeals Court would reverse Judge Torres’ decision and the outcome of that reversal.

SEC Enforcement Director Departs

The SEC’s move comes as the agency’s Director of Enforcement, Gurbir S. Grewal, announces his departure from the Commission. A press release from the SEC revealed that Grewal would leave the agency on October 11. Upon his exit, the Enforcement Division’s Deputy Director, Sanjay Wadhwa, will serve as Acting Director, while the Division’s Chief Counsel, Sam Waldon, will become the Acting Deputy Director.

“From recalibrating penalties and remedies to confronting emerging risks to holding issuers, insiders, and gatekeepers accountable, I am incredibly proud of all that we’ve accomplished as a Division during my tenure. I am grateful to Chair Gensler not just for the opportunity to lead the Division, but also for his unwavering commitment to investor protection and support of a robust enforcement program,” said Grewal.

The SEC chair, Gary Gensler, commended Grewal’s service, revealing that he was all about protecting investors and ensuring compliance throughout his tenure in the agency.