The U.S. Securities and Exchange Commission has filed a last-minute appeal in its ongoing legal sparring with Ripple Labs, seeking to reverse parts of a summary judgment delivered by U.S. District Judge Analisa Torres more than a year ago.

Torres’ July 2023 ruling partially favored Ripple by concluding that the company’s sales of XRP to retail investors on digital asset platforms did not violate U.S. securities laws. 

The court found that these transactions did not meet the legal criteria for an investment contract, dealing a blow to the SEC’s broader efforts to regulate cryptocurrency sales under existing securities laws.

Filing in the U.S. Court of Appeals for the Second Circuit late Thursday, the SEC does not contest the decision that XRP sales to retail investors through exchanges are not securities. Instead, the agency is focusing its challenge on other key aspects of the ruling.

The appeal targets the court’s decision that Ripple’s offers and sales of XRP on digital asset trading platforms, as well as personal sales by Ripple executives Bradley Garlinghouse and Christian Larsen, did not constitute securities violations. 

The agency is also contesting the ruling that Ripple’s distributions of XRP in exchange for non-cash consideration were not in breach of securities laws.

Ripple’s institutional sales of XRP to large investors were previously found to have violated securities laws by the U.S. Southern District Court, which imposed a $125 million civil penalty on the San Francisco-based firm.

The SEC’s appeal, which will be reviewed de novo, will allow the appellate court to reconsider the lower court’s interpretation of securities laws in relation to XRP sales on digital platforms and non-cash transactions. 

De novo means that the appellate court will reconsider these legal issues from scratch without deference to the district court’s interpretations. Ripple’s victory regarding XRP’s retail sales, however, remains intact and is not part of the appeal.

While it was widely anticipated that the SEC would file its notice of appeal on October 2, users have taken to social media to decry what they view as the agency missing a 14-day window for filing its Form C.

A Form C, in the context of appellate court procedures, is used by the appellant—in this case, the SEC—to provide basic information about the appeal and the lower court’s decision.

Filing is mandatory and must be done within 14 days of filing the notice of appeal, according to the form’s own legalese. It’s a date that some have accused the agency of missing, as the document is dated October 16, while the Second Circuit’s docket shows a filing for October 17. 

Decrypt attempted to contact the SEC on that point but has so far received no response. A spokesperson for Ripple did not answer questions relating to the deadline window, instead pointing Decrypt to a social media post by the firm’s chief legal officer, Stuart Alderoty.

“No surprises here — once again, it’s been made clear. The Court’s ruling that “XRP is not a security” is NOT being appealed. That decision stands as the law of the land,” Alderoty tweeted Thursday.

“Stay tuned for Ripple’s Form C to be filed next week,” the executive added.

A German national accused of overseeing a $150 million crypto fraud has turned fugitive after failing to appear in court.

Horst Jicha was facing trial on charges of securities fraud, wire fraud, and money laundering over his alleged involvement in the USI Tech cryptocurrency scheme.

Per CNBC, Jicha is suspected of tampering with his ankle bracelet monitor, after Pretrial Services noticed that it had stopped working. Jicha then failed to respond to an email from Pretrial Services directing him to visit their office.

Over a day had elapsed before Pretrial Services notified prosecutors that Jicha’s ankle monitor had stopped working, CNBC reported. Following his failure to appear in court, there is a “very active investigation underway to capture him,” John Marzulli, a spokesman for the Brooklyn U.S. attorney’s office, said.

Jicha was on a $5 million bond guaranteed by his domestic partner, his children, and three others, which will be forfeited following his flight.

What was USI Tech?

Jicha is accused of operating USI Tech, a “multilevel marketing scheme to defraud U.S. investors excited about the crypto market,” U.S. Attorney for the Eastern District of New York Breon Peace said in a January 2024 statement announcing the charges.

USI Tech allegedly guaranteed returns to investors. In reality, prosecutors contend, the platform was “just a facade,” and after questions were raised, Jicha absconded with over $150 million of investors’ funds, the bulk of which was held in Bitcoin and Ethereum.

Per CNBC, Jicha was placed under house arrest, and was required to surrender all passports and travel documents to the authorities as a condition of his release.

Edited by Andrew Hayward

Days after the U.S. government announced unprecedented criminal and civil charges against four crypto companies for alleged market manipulation and “wash trading,” meme coin projects dependent on those same firms have begun attempting to distance themselves from the fallout. 

In particular, token teams that partnered with one of the implicated companies, the market maker Gotbit, have started issuing statements vigorously disavowing the firm they depended on for liquidity.

“We have halted our relationship with Gotbit, who were our market maker partners,” the Ethereum meme coin project Neiro posted on Twitter Friday. “None of the issues involving Gotbit or its employees involve or are relevant to Neiro in any capacity.”

Members of the crypto community were not so quick to accept Neiro’s assurances. The pseudonymous on-chain sleuth ZachXBT, for example, soon after excoriated Neiro for partnering with Gotbit prior to this week’s charges, despite the fact that concerns about the market maker have been public knowledge for over a year. 

Other meme coin projects jumped on Friday to make clear they didn’t want to associate with Gotbit any longer—despite the fact that the self-described hedge fund and meme coin market maker still exercised substantial control over their tokens.  

“Unfortunately, Gotbit still holds a large portion of our supply, including marketing, treasury, and team tokens, and they are currently unwilling to return them,” the team behind the Tron meme coin BMS conceded, in a post intended to announce a severing of ties with the company. 

Even meme coins that claim to have stopped working with Gotbit prior to this week made a point of emphasizing their condemnation of the company’s alleged conduct.

The U.S. Department of Justice (DOJ) has accused Gotbit of making illegal wash trades with digital tokens to artificially inflate the tokens’ prices, before selling off the tokens in alleged “pump and dump” schemes. The U.S. Securities and Exchange Commission (SEC) further accused Gotbit of providing “on-demand market manipulation” by “generating fake, daily trading volume often in the millions of dollars by essentially trading crypto assets with itself.”

Those allegations probably surprised very few. Back in 2019, Gotbit co-founder Alexey Andryunin openly told CoinDesk in detail about his company’s business model: manipulating crypto markets for a fee, to increase the perceived legitimacy of obscure tokens. 

“The business is not entirely ethical,” Andryunin said at the time.

Edited by Andrew Hayward