Ripple Labs’ Face-to-Face With SEC’s Claims on XRP Continues
The digital asset firm Ripple Labs Inc. advances its fight against a Securities and Exchange Commission lawsuit, with the latter claiming that its token, XRP, is not a security as the SEC suggests.
The Common Consensus
The Securities and Exchange Commission and Ripple Labs may have contrasting opinions, but both agree that the case involving the two entities should finally end. The two entities filed motions for a pre-judgement summary in the Southern District of New York, Manhattan, in a federal court of law.
The motions raised by SEC and Ripple asked the district magistrate, Analisa Torres, to make a final judgment based on the available evidence on the arguments filled in the accompanying motion documents. SEC and Ripple Labs incorporated these documents in the federal court’s database on Friday.
Ripple’s Defense
Ripple Labs argued in the filed motion that it required immediate dismissal of the lawsuit claiming that the XRP token can’t be termed as security. The crypto firm also stated that there has never been an investment contract that gives investors any rights, let alone requiring the issuer to act in the interest of Ripple.
On the other hand, the SEC sued Ripple Labs in December 2020, just a day before the previous SEC chairperson stepped down. SEC’s allegations stated that Ripple Labs had raised more than $1.3 billion in selling the XRP token in unregistered securities transactions.
In defense, Ripple argued that XRP transactions that involved sales and trading XRP did not meet the tenet requirements laid out by the United States Supreme Court’s Howey Test. A Howey Test is a US Supreme Court case that determines whether something is a security or not.
The Long Fight
This is not the first-time motions concerning this case have been submitted. For the past two years, the two parties have legally battled each other through the submission of numerous motions. This has not effectively worked as the court has barely made a decision. The underlying claim remains -Did Ripple violate any security law by opening sales of the Ripple Token, XRP?
The battle seems to continue, and the war has no signs of ending. Ripple and SEC ask the court to decide if there is enough evidence to prove that Ripple violated security regulations. SEC explained that statements issued by some of the Ripple executives portrayed that Ripple sold XRP to retail and institutional investors who hoped their newly acquired digital assets would appreciate over time. This speculative conspiracy is not new in the cryptocurrency space.
From Ripple’s point of view, there was no contract between Ripple and the enterprising investors. The cryptocurrency firm emphasized that many Ripple investors (XRP holders) buying the token through exchanges would not know who they were purchasing it from. There was no joint enterprise between XRP and its investors, which is a requirement that Ripple should have met before selling the token to fulfill the Howey Test to term Ripple as an exchange.
Ripple’s tokenomics are solid. The project may explode after the lawsuit ends in Ripples’ favor.
