There are 12 days left before the start of the first court session between the US Securities and Exchange Commission (SEC) and Ripple.
The SEC filed its legal complaint against the Ripple Company for selling unregistered securities according to it, and the SEC accused the Ripple Company of misleading and considering “XRP” as a security and not a cryptocurrency.
Stuart Aldrotti, Ripple’s chief legal advisor, touched on several factors and considerations to address the complaint.
He was told that the general public only knows the SEC side of the story at the moment.
The Ripple Company formally addressed the complaint in a legal document called “The Answer”, which was previously discussed in a previous article on Bitcoin Arabs.
Ripple’s lawyers provide some details about the SEC case against Ripple:
Ripple responded to all the claims of the Securities and Exchange Commission by submitting 93 pages, indicating that XRP was neither a guarantee contract nor an investment contract or a security as the authority called it.
Ripple’s legal team contested the US Securities and Exchange Commission’s accusation, stating that the company had never entered into a contract with any of the XRP holders or hosted an Initial Offer (ICO) for XRP coins.
Ripple’s lawyers explained that XRP coins were sold primarily on a decentralized network, and that XRP digital currencies provide the benefit as a medium of exchange in international and domestic transactions.
Ripple’s lawyers explained:
The XRP function is not fully compliant with SEC regulation.
Requiring to register XRP as both a security and a safety coin is an impairment of the currency’s primary utility.
Ripple XRP sales directly from Ripple:
Ripple’s attorneys pointed to the fact that the monthly issue of Ripple’s XRP digital currency of the escrow account is a small portion of the XRP market, contrary to what the SEC’s complaint misleadingly suggested.
The “SEC” previously hinted that the sales of XRP from Ripple chief executives in addition to the monthly issue of XRP coins from the guarantee may have contributed to market manipulation and nullify the concept of decentralization.
Now, the Ripple statement argues that this is all wrong, and the response read:
The complaint misleadingly indicated that sales of XRP ripple constituted a significant part of the XRP market, but that in nearly all periods, these sales accounted for less than 0.4% of the total XRP transaction volume.
Finally, Ripple’s attorneys indicated that the SEC had not provided fair advance notice that the XRP sales were violating securities laws.
Ripple said that in May 2015, the US Department of Justice and the Financial Crime Tracking Network (FinCEN) had already agreed to define XRP as a convertible digital currency set up for sales and secondary market transactions.
And the Ripple response stated the following:
The plaintiff (the Securities and Exchange Commission) learned of the 2015 settlement, years later, the plaintiff did not provide the defendants (Ripple Company) any clear notice prior to the latest charges.
In the plaintiff’s view, potential XRP sales to the defendants as permitted by the agreement would constitute a violation of another federal law.
Ripple calls for “XRP”, such as Bitcoin “BTC” and “ETH”:
In addition to what was discussed above in Ripple’s response to the Securities and Exchange Commission, Ripple also submitted a Freedom of Information Act request to the Securities and Exchange Commission, requesting documents from the agency explaining how Bitcoin and Ethereum were not classified as securities.
Ripple is likely to focus on why Ethereum was not considered a security by the “SEC” in 2018, despite the fact that the Ethereum “ETH” was launched through an ICO that gave investors an opportunity to buy the currency earlier than Its official release.
As we indicated at the beginning of the article, the first part of the trial between the SEC and Ripple will take place on February 22nd.
The fate of the price of the XRP digital currency largely depends on the outcome of the lawsuit, as many cryptocurrency trading platforms have moved to remove the coin for fear of possible sanctions from the SEC.