The two-year battle between the SEC and Ripple is nearing its end: it appears that the charges brought against XRP are unfounded.
In fact, Ripple recently argued in its motion papers against the SEC that the latter failed to prove that XRP’s offering between 2013 and 2020 was an offer or sale of an “investment contract” and, therefore, a security under federal securities laws.
Summary
SEC vs Ripple (XRP): here are all the details
Ripple, the real-time funds transfer network as well as a prestigious network for currency exchanges, filed its latest application against the US regulator on 2 December.
So, with this move, the most talked about cryptocurrency lawsuit involving the US Securities and Exchange Commission (SEC) and Ripple appears to be nearing its conclusion.
In fact, on 2 December, the SEC and Ripple both filed redacted responses to each other’s opposing motions for summary judgment.
Specifically, as anticipated, Ripple argued that the SEC failed to prove anything substantive against XRP, which was accused that its offering between 2013 and 2020 was an offering of an investment contract.
Furthermore, Ripple concluded the document by stating the following:
“The court should grant the defendant’s motion and should deny the SEC’s motion.”
Ripple’s (XRP) statements against the SEC
Stuart Alderoty, Ripple’s general counsel, on 3 December on his official Twitter account stated:
This is our final submission where we ask the court to grant judgment in our favor. After two long years, Ripple is proud of the defense we’ve mounted on behalf of the entire crypto industry. We have always played it straight with the Court. Can’t say the same for our adversary.
— Stuart Alderoty (@s_alderoty) December 2, 2022
Moreover, in another Twitter post, Alderoty went on to criticize the SEC on 5 December, calling it a “bouncing regulator” and citing two statements that he suggests are at odds with each other.
Follow the bouncing regulator.
“Howey provides a clearly expressed test for determining what constitutes an investment contract.” SEC 4/22/21
“Hinman’s speech provided thirteen expressly non-exhaustive factors that market participants could consider.” 12/2/22
— Stuart Alderoty (@s_alderoty) December 4, 2022
In an earlier tweet on 30 November, former US Attorney James Filan, said only three issues remain to be resolved in the SEC vs Ripple case.
Respectively: the summary judgment motions, expert challenges, and issues related to the “expert reports,” the Hinman documents, and other material relied upon by the SEC and Ripple in their motions.
Specifically, the Hinman documents refer to the speech William Hinman gave at the Yahoo Finance All Markets Summit in June 2018, in which he stated that Ether (ETH) was not a security.
Thus, everything is heading toward an end for the long Ripple vs SEC conflict, and presumably, like many investors also claim, with an overwhelming victory for Ripple.
SEC and Ripple legal dispute: how and why it started
The ongoing legal dispute between the SEC and Ripple began in December 2020, when the SEC initiated legal action against Ripple. Specifically, the SEC alleged that Ripple raised $1.3 billion by offering Ripple’s native cryptocurrency, XRP, as unregistered securities.
In December 2020, the Securities and Exchange Commission had sued Ripple and two of the company’s executives, founder Christian Larsen and CEO Brad Garlinghouse.
However, from the outset, Ripple disputed the charges, explaining that XRP should be considered a virtual currency and not a security. And, again from the early days of the clash between the two, Ripple pointed to the SEC’s lack of evidence.
Even then, Alderoty expressed his views on the matter on Twitter, calling the SEC’s moves as noise for its own sake and arguing that the SEC has been unable to identify any investment contracts and cannot, therefore, satisfy a single prong of the Supreme Court’s Howey test.
However, despite the ups and downs of the trial that at first saw the SEC with the upper hand, it is now Ripple that has the upper hand. As already anticipated, at the moment the victory seems to be in the hands of the crypto company and the SEC seems to be just trying to stall.
