Ripple Responds to SEC Lawsuit Over XRP Sales
The U.S. Securities and Exchange Commission (SEC) is ignoring that the XRP cryptocurrency has utility, fintech startup Ripple alleged in its response to a securities complaint filed by the regulatory agency.
In a Friday filing, Ripple Labs pushed back against the SEC’s allegations, which claim the San Francisco-based firm violated U.S. securities laws for over seven years by selling $1.3 billion worth of XRP tokens.
“The functionality and liquidity of XRP are wholly incompatible with securities regulation. To require XRP’s registration as a security is to impair its main utility,” the response said.
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In a 93-page filing, Ripple responded to each of the SEC’s paragraphs. In its affirmative defenses, Ripple stated that XRP is not a security or investment contract, and the firm’s sales or distributions of XRP are likewise not investment contracts.
Ripple rebuttal
The SEC sued Ripple in December 2020, alleging the company, CEO Brad Garlinghouse and Chairman Chris Larsen sold over $1 billion in XRP, promoted the token and paid third parties to support the cryptocurrency.
Parts of Ripple’s response seem to focus on what XRP actually does, in the company’s view, saying the SEC complaint ignored that XRP is open source and claiming that its price has correlated with the price of bitcoin and ether.
“The Complaint mischaracterizes advice that Ripple received in 2012, from which a reasonable reader actually would have concluded that Ripple Credits (a past name for XRP) were not a security,” the filing adds a few paragraphs down.
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Ripple is also claiming that the SEC did not provide fair notice that its sales of XRP might be violating the law.
It pointed to its settlement with the U.S. Department of Justice and the Financial Crimes Enforcement Network in 2015, which registered XRP as a convertible virtual currency and allowed for sales and secondary market transactions.
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“Upon information and belief, Plaintiff knew of that 2015 settlement and yet, for years after, Plaintiff provided Defendants with no clear notice that, in Plaintiff’s view, Defendants’ prospective XRP sales as permitted by the agreement would nevertheless constitute a violation of another federal law,” the response said.
Commodity clarity
In addition to filing its response, Ripple filed a Freedom of Information Act request for documents from the SEC on how it determined that bitcoin and ether, the top two cryptocurrencies by market capitalization, are not securities.
“To date, they have offered no guidance for that determination, hindering responsible players like Ripple from being able to innovate in the U.S. to bring faster, cheaper and more transparent global payments to consumers who need them the most. As we have said for many years, we’re simply asking for the rules to be clearly stated and applied consistently,” a spokesperson said in an emailed statement.
XRP is up nearly 10% over the past 24 hours, joining a broader spike across the crypto market that saw dogecoin jump over 700% on Thursday.
Read the document:
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XRP Surges 50% After Ripple Files SEC Response
The last few months have been very challenging for XRP holders. The cryptocurrency plummeted in price while the other top cryptocurrencies by market cap experienced price growth not seen in years.
XRP’s price collapse was due to charges brought against Ripple Labs and two of its executives in December. The SEC charges include the sale of over $1 billion in unlicensed security based on their sales of XRP. The SEC alleges that XRP is a security, a designation not assigned to the top two cryptocurrencies, Bitcoin and Ether.
This announcement led to an over 50 percent price decrease as many platforms that utilized RippleNet and XRP suspended operations over these allegations. These platforms are unregulated by the SEC and want to remain that way. As such, these allegations might bring them under US jurisdiction if they participate in the sale of securities to users. Even regulated firms like Grayscale, the largest digital asset manager in the cryptocurrency space, reduced XRP holdings following this announcement.
Ripple is Fighting Back
Many stakeholders in the XRP ecosystem were extremely upset with these allegations. Some filed petitions filed alongside lawsuits. Some were against the SEC for waiting seven years after the launch of XRP to take action. Others sued platforms like Coinbase for allowing the unregistered sale of securities.
Aside from all the drama surrounding these charges in late 2020, Ripple has legally responded to the accusations. In the filing, they claimed that the charges are based on ‘an unprecedented and ill-conceived legal theory – with neither statutory mandate nor congressional authorization”.
Ripple Says XRP is Not a Security
The Ripple Labs legal team states that XRP is not a security. They ground this on the fact that ‘XRP performs a number of functions that are distinct from the functions of “securities” as the law has understood that term for decades. For example, the token functions as a medium of exchange […] It is not a security and the SEC has no authority to regulate it as one”. Ripple Labs, Brad Garlinghouse and Christian Larsen claim that since the token functions as ‘currency’ providing a means to store and transfer value, the SEC does not have jurisdiction over it as a security.
However, Ripple Labs and the two other defendants allegedly sold over $1 billion of XRP to fund their operations and for personal reasons. This has never traditionally been possible from a privately issued ‘currency’. For now, XRP will remain in limbo, but it should be very interesting to see how the SEC responds.
The crypto community, however, seems glad to see Ripple responding officially, if the price is any indication.
英國財政部重申：XRP為交易代幣而非證券
英國財政部重申：XRP為交易代幣而非證券
比推Bitpush.News-Liang Che / 何渝婷
2021-01-13 09:05
英國財政部在最新發表的一份文件中，重申了XRP是一種交易代幣而非證券的立場。
在最新的文件中，英國財政部概述了英國對加密貨幣和穩定幣的監管方法。該報告將XRP、以太坊和比特幣歸類為「主要作為交易手段的代幣」，這些「交易代幣」屬於「不受監管」的範疇，這意味著它們既不是數位貨幣，也不是證券化代幣。
英國財政部的這份報告，參考了英國金融行為監管局（FCA）在2019年制定的監管框架。該部門表示，「證券化代幣具有類似於英國立法規定的特定投資特徵，如股票或債務工具。廣義上講，其很可能是傳統證券的代幣化、數位化形式。」
英國方面的這一表態，對Ripple來說非常重要，該公司作為XRP代幣背後的公司，正在面臨美國證券交易委員會（SEC）的訴訟，SEC指控XRP在推出時是一種未註冊的證券，並且目前仍是一種證券。
據《比推》此前報導，Ripple此前在呼籲美國澄清監管時也強調了英國FCA的分類。該公司表示，「率先制定這些框架的國家，將更好地吸引資本、公司和工作崗位，因為區塊鏈技術將一直存在。監管不明確的地區應該建立自己的框架以保持競爭力，避免公司流失到監管更好的市場。」
Ripple執行長Brad Garlinghouse此前表示，該公司95%的客戶在美國之外。由於監管方面的不確定性，美國的潛在客戶不願使用Ripple的XRP相關服務。
作為應對措施，Ripple有可能將總部遷至英國、日本或新加坡等監管政策明確的國家。
本文為巴比特授權刊登，原文標題為「英國財政部重申XRP是交易代幣而非證券」