As the SEC prepares to appeal a federal judge’s judgment on XRP, Stuart Alderoty, Ripple Labs’ Chief Legal Officer, feels the agency is headed for another high-profile setback. During a recent interview, Alderoty shared that this appeal will backfire on the SEC. According to Ripple Labs’ CLO, he’s confident about their case in the Southern District of New York and even more confident as the company heads to the Second Circuit.
When the SEC first sued Ripple and two of its executives back in 2020, Ripple made it clear that its legal battle wasn’t just for itself but for the entire industry, Alderoty explained. He noted that the SEC’s actions were a warning to others in the space: “They were coming for everyone.”
Ripple Labs vs. SEC Legal Battle: Implications On Other Firms
Nearly four years later, Ripple’s legal battle has become even more important as it heads to the Second Circuit Court of Appeals. The decision could set a new standard in the Southern District of New York, guiding how judges handle securities laws for token issuers in the region’s financial centre and beyond.
Ripple Lab praised U.S. District Judge Analisa Torres’ ruling last year, which found that XRP is “not necessarily a security on its face.” However, not all judges have seen it the same way. In the SEC’s case against Terraform Labs, U.S. District Judge Jed Rakoff disagreed, refusing to treat tokens differently based on how they’re sold and rejecting Judge Torres’ approach just weeks after her ruling.
Alderoty believes the SEC’s appeal is likely to fail, pointing out that most rulings in the Second Circuit are upheld rather than overturned. On Tuesday, an SEC spokesperson argued that Judge Torres’ decision “conflicts with decades of Supreme Court precedent and securities laws,” reiterating points the agency made earlier this month.
Judge Torres’s Latest Order on Ripple Labs
In August, Judge Torres ordered Ripple Lab to pay a $125 million fine for XRP transactions that violated securities laws. The SEC had accused Ripple of raising $1.3 billion through unregistered securities sales since 2013, later pushing for a $2 billion fine.
Ripple’s lawyer, Stuart Alderoty, believes SEC Chair Gary Gensler is trying to keep “a cloud of uncertainty” hanging over the crypto industry by appealing. He also acknowledged that the Second Circuit’s decision could either support Judge Torres or Judge Rakoff—there’s a chance it could go either way.
The SEC hasn’t yet specified which parts of Torres’ ruling it plans to challenge. Meanwhile, Ripple, the company behind the seventh-largest cryptocurrency, is making a legal move of its own.
Ripple Lab’s recent cross-appeal, announced last week, was partly procedural, Alderoty explained. But the company also intends to argue that, legally, a digital asset should only be considered an investment contract if it includes a contract with specific rights and obligations.
Ripple Launches RLUSD Stablecoin Amid SEC Case
Ripple has rolled out RLUSD, a stablecoin aimed particularly at companies and financial institutions. It is meant to assist in performing cross border transactions, facilitate the process of asset tokenization and also fit well into the decentralized finance sphere. In order to introduce slightly wider masses to RLUSD, Ripple worked with a number of larger market players, such as Uphold, Bitstamp or MoonPay, for example.
Brad Garlinghouse, CEO of Ripple Words, emphasized the weight of the stablecoin issued instantly by Ripple.
He said, “Now, looking at our first three exchanges, obvious use and need for RLUSD, good basic compliance, then this is the beginning of an enterprise-grade stablecoin that will make Ripple the gold standard for the rest of the competition.”
RLUSD will be issued, pursuant to a bespeaking New York Trust Company Charter. Additionally, Ripple has put together an advisory board which includes former FDIC chair Sheila Bair, to manage the roll-out. In the beginning, RLUSD will be supported on the XRP Ledger as well as on the Ethereum blockchain.
Ripple’s fight with the SEC has stretched on for four years, but Alderoty believes things will move faster in the Second Circuit. He expects that after both sides file their briefs and make their arguments, a decision could come by early 2026 at the latest.
