Ripple’s Chief Legal Officer Discusses Potential Outcomes in SEC Case

Stuart Alderoty, Ripple’s Chief Legal Officer, has outlined several possible scenarios for the ongoing legal dispute between Ripple and the U.S. Securities and Exchange Commission (SEC).

In a recent post on X, Alderoty speculated that the U.S. Second Circuit Court of Appeals will either affirm or expand upon Judge Analisa Torres’s ruling. He suggested that while the SEC may hope for a remand, the likelihood of that occurring is “a remote hope” at best.

“The 2nd Circuit 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,” Alderoty wrote.

He elaborated that Judge Torres has reinforced her original ruling during the SEC's unsuccessful interlocutory appeal, which included all of Ripple’s defenses and the significant Fair Notice argument. This argument questions whether a person of “ordinary intelligence” could understand what the law prohibits. If the case were to be remanded, this defense and others could be reintroduced in court, placing the SEC in a difficult position of arguing against Judge Torres's interpretation.

Alderoty drew an analogy between the case and Herman Melville’s Moby Dick, with SEC Chair Gary Gensler as Captain Ahab, who is fixated on defeating the whale that took his leg. He humorously suggested that the courtroom dynamics resemble a comedy, akin to My Cousin Vinny.

In a separate update last week, Alderoty confirmed that the SEC has not appealed the court’s ruling that XRP is not a security. Instead, the SEC filed a Form C civil appeal, seeking a review of the law's application regarding the prior summary judgment. This appeal includes a request to reconsider the decision on XRP sales on exchanges, as well as personal sales by Ripple CEO Brad Garlinghouse and co-founder Chris Larsen.

In an interview with Fox Business, Alderoty mentioned that the case could extend until July 2025. On October 10, Ripple filed its own cross-appeal to challenge the ruling on institutional sales.

The legal saga began in December 2020 when the SEC filed a lawsuit against Ripple Labs, accusing the company of conducting unauthorized sales of XRP tokens valued at $1.3 billion, which the SEC classified as unregistered securities. The SEC also alleged that XRP created certain profit expectations for investors, aligning it with the criteria for security classification.