Ripple has taken a stand against the U.S. Securities and Exchange Commission (SEC) as they seek to contest a court decision that ruled in favor of Ripple. The ruling, issued in July, declared that XRP was not considered a security for most of its sales to the public, contradicting the SEC’s allegations.
In a court filing on September 1st, Ripple’s lawyers argued that the SEC had no valid grounds for an appeal since it was dissatisfied with the judge’s decision without presenting any exceptional circumstances necessitating an interlocutory appeal. Moreover, the lawyers urged the judge to reject the SEC’s request to pause the case pending further review.
In December 2020, the SEC filed a lawsuit against Ripple and its CEO Brad Garlinghouse and co-founder Chris Larsen, alleging that they offered unregistered securities through XRP token sales. This litigation led numerous crypto exchanges to delist or suspend trading of XRP, impacting its price and market capitalization.
However, in a significant victory for Ripple and the crypto industry as a whole, Judge Analisa Torres ruled in July that XRP did not meet criteria as a security according to SEC guidelines for most sales made to retail investors. Judge distinguishes between the sale of XRP directly to individuals and the sale of XRP to institutional investors.
The SEC appealed this ruling in August by arguing substantial differences of opinion on legal matters involved. They referenced another case involving Terraform Labs and founder Do Kwon, where Judge Jed Rakoff rejected Torres’s approach and determined that Terra USD token could potentially be classified as a security when sold to retail investors.
Ripple Defends Its Position and Crypto Innovation
Ripple asserts that XRP should not be considered a security but rather as a digital asset enabling cross-border payments and fostering innovation within the cryptocurrency domain. The company has also criticized the SEC for its lack of clarity and consistency in regulating cryptocurrencies and for harming millions of XRP holders who were not part of the lawsuit.
It’s sad that so many in the US crypto community have to resort to the legal process to prove this SEC is out of control and consistently wrong on the facts and the law.
Garlinghouse said in an Aug. 30 X post.
In 2023, the SEC intensified its actions against various crypto companies for suspected securities violations. Notable firms under scrutiny include Binance and Coinbase. However, on August 29th, there was a significant development in favor of Grayscale, an assessment manager specializing in crypto products.
They successfully appealed for a court review of their application for a spot Bitcoin exchange-traded fund (ETF). Meanwhile, the legal battle between Ripple and the SEC is still ongoing. Judge Torres has proposed a jury trial scheduled to commence during the second quarter of 2024.
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