There has been some positive news published in recent days regarding the lawsuit between Ripple and the SEC, but the price of XRP is still down.
To be fair, on Saturday 19 February, the price had risen rapidly from $0.78 to $0.83, thanks to this news, but the difficulties which the financial markets are currently experiencing due to geopolitical tensions have brought the price back down to $0.77 the following day.
In fact, today it even fell back to $0.68.
The positive news
The positive news was shared on Twitter by lawyer James K. Filan.
1/5 Overall favorable to Ripple and the Individual Defendants. Both memos are from Perkins Coie. The first memo was prepared in February 2012 and sent to Jed McCaleb and Jesse Powell. It says that if NewCoin is sold in what now would look like an ICO
— James K. Filan 🇺🇸🇮🇪 (@FilanLaw) February 18, 2022
Filan has published two memos from 2012 that he believes are overall favourable to Ripple. These are two memos that the SEC is evaluating to try to figure out whether or not XRP was sold by the company as a security.
The first memo is from February 2012, and was sent to Jed McCaleb and Jesse Powell. According to this memo, the so-called “NewCoin” – first called Ripple and then XRP – was sold as what we would nowadays call an ICO.
This memo might help the SEC’s attempt to prove that XRP was marketed as a security, but Ripple later reviewed its business plan.
The second memo
In the second memo, sent to Chris Larsen and Jed McCaleb in October of that year, it was stated that there was a risk that the SEC might disagree, and steps were suggested to minimize the risk that the SEC would consider Ripple Credits to be a security.
According to Filan, these memos show how Ripple was already trying to be careful not to violate SEC rules at the time.
In particular, he points out that it appears that Ripple was very proactive, and not at all reckless, to the extent that it did not ignore any substantial risks.
Has XRP been sold as a security
All of this obviously isn’t enough for Ripple to prove that XRP wasn’t brought to market as a security, but at least it shows how careful the company was in this regard, at a time when the SEC hadn’t even begun to consider digital tokens.
However, what the SEC is investigating is not so much Ripple’s internal behaviour at that time, but the way it persuaded investors to buy their token. If it promised them returns then most likely these tokens were sold as some sort of security that would generate gains, and if so the SEC may eventually be right.
The issue does not look like it is going to be resolved any time soon, and at the moment it does not seem to be clear who is going to win.