Ripple Labs and U.S. SEC Call for a Conclusion to the XRP Dispute

Earlier in December 2020, the U.S. Securities and Exchange Commission (SEC) sued Ripple Labs for allegedly selling XRP in unregistered securities transactions. The legal claims were charged against the crypto company’s CEO Brad Garlinghouse and Chairman Chris Larsen. Ripple, on the other hand, defended that XRP did not fall under the tenets of the Howey Test, which is used as a determinant of whether a financial instrument is considered a security.

The crypto company furthered that XRP is a currency — much like Bitcoin (BTC) and Ether (ETH) — which are not recognized as securities by the SEC. Over the past two years, the concerned parties have filed several discovery motions in an effort to settle their respective claims. However, this did not directly translate to the resolution of the fundamental case of Ripple violating securities laws through its sale of XRP.

Hence, both the SEC and Ripple have filed motions for summary judgment in the Southern District of New York. This ultimately urges the federal court to issue an immediate ruling and conclude the lawsuit. For its position, the SEC remains adamant that the crypto company violated federal securities laws while Ripple called for the dismissal of the charges.

The SEC claims that statements made by Ripple’s executives promised XRP investors that the cryptocurrency would eventually increase in value over time. “Ripple publicly touted the various steps it was taking and would take to find a ‘use’ for XRP and to protect the integrity and liquidity of the XRP markets,” it explained.

Meanwhile, Ripple argued that there was no contract between the firm and its investors. It added that there was also no common enterprise, which is among the requirements under the Howey Test. XRP holders, particularly those buying through crypto exchanges, did not necessarily know who they were purchasing the coins.

“Even if the SEC were to engage in a belated, post-discovery transaction-by-transaction analysis to identify XRP offers and sales with contracts, its claim would still fail as a matter of law,” Ripple elaborated in its filing. “Not one of those contracts granted post-sale rights to recipients as against Ripple or imposed post-sale obligations on Ripple to act for the benefit of those recipients.”

Source: CoinDesk