Top Lawyer Highlights 7 Key Takeaways About SEC Appeal Against Ripple

Attorney Jeremy Hogan provides a critical analysis of the SEC's decision to appeal the Ripple ruling.

As previously reported, the SEC has announced its intention to appeal Judge Torres’ ruling in the Ripple case. Although the agency has not formally filed the appeal brief, there is speculation that the upcoming appeal would revolve around Judge Torres' ruling on Ripple's programmatic sales and other distributions of XRP, which were deemed non-investment contracts.

This speculation stems from the fact that the regulator had sought to overturn these decisions through an injunction. While the judge denied that request for a preliminary appeal at the time, there are signs that the SEC would resume its efforts to overturn the decision in the Second Circuit.

Poor risk calculation by the SEC

In a recent analysis, attorney Hogan called the SEC's appeal decision a “huge mistake.” He said the securities regulator would likely appeal Judge Torres' decision on programmatic sales. The lawyer mentioned that the SEC did not assess the risk of appealing the Ripple ruling.

He noted that the SEC could force Ripple to pay more fines if it wins the appeal. Conversely, should Ripple make the “blue sky” argument and win, the regulator risks destroying its ability to regulate cryptos.

Consequently, the pro-XRP lawyer called the SEC's appeal decision a poor risk calculation and stressed that the regulator would make a bad stock trader.

Right of appeal

The attorney explained that the SEC's latest notice of appeal is different from the previous attempt rejected by Judge Torres. Hogan said this appeal was the SEC's right. Therefore, the judge cannot reject the application.

High probability of loss

Additionally, Attorney Hogan stated that the SEC would likely lose the appeal, citing the fact-heavy nature of Judge Torres' decision. It is noteworthy that Judge Torres issued the Ripple decision by applying the Howey test to the case.

For example, the programmatic sales decision was based on the third factor of the test, which is the expectation of profit resulting from the efforts of others.

The judge, who cited affidavits from over 3,000 XRP holders, found that retail buyers of XRP did not expect to make profits by relying on Ripple's efforts.

It's a question of money

Additionally, the legal expert noted that even if the SEC wins the appeal, the impact would likely be limited to Ripple paying more money in fines.

He claimed that a positive decision for the SEC would not change how Ripple uses XRP, adding that the regulator cannot object to the token's non-security status.

Possible timetable for the appeal decision

Attorney Hogan predicted that the Second Circuit will not make a final decision until late 2025 or early 2026. Although he had previously speculated that the appeal decision could be issued in the summer of 2025, he admitted he was wrong.

The lawyer argued that the SEC could file its actual notice of appeal by mid-December, potentially disclosing the issues it plans to appeal.

Resignation of SEC Enforcement Director

The legal expert pointed out that there may be a deeper connection between the resignation of SEC Supervisory Director Gubir Grewal and the commission's appeal decision. Notably, the SEC filed its appeal in the Ripple case just hours after Grewal planned to leave the Commission.

A similar pattern occurred when the Ripple lawsuit was first filed. Back then, Bill Hinman, the former SEC director who declared Ethereum (ETH) a non-security, left the SEC less than two months before the commission charged Ripple with violating federal securities laws. Additionally, the SEC sued Ripple on the last day of former Chairman Jay Clayton’s term.

This coincidence has raised eyebrows among crypto advocates, with some, like Hogan, suggesting that there may be a deep connection between these events.

What could lead to an early end to the SEC complaint?

While Hogan expects the appeal to be completed by late 2025 or early 2026, he suggested the case could likely be completed sooner. The lawyer emphasized that factors such as a change in SEC leadership with Donald Trump as president could lead to a premature resolution of the appeal.

Several crypto advocates, including Ripple CLO Stuart Alderoty, have supported Trump as they believe he would introduce favorable regulations for the industry. Meanwhile, Ripple is considering filing a cross-appeal.