The United States Securities and Exchange Commission (SEC) and Ripple Labs want a federal judge to decide whether the blockchain company, whose native token is XRP, has violated securities laws or else, to dismiss the lawsuit without requiring a lengthy judgment.
The SEC and Ripple have filed summary judgment requests in the Southern District of New York asking Judge Analytics Torres to make a decision based on the arguments presented in the accompanying documents. These were posted to a federal court database on Friday.
The SEC sued Ripple Labs, CEO Brad Garlinghouse and Chairman Chris Larsen in December 2020 (the day before former SEC Chairman Jay Clayton left office) over allegations the company had raised more than $1 .3 billion selling XRP in unregistered bond transactions.
Ripple argued that XRP sales and trading did not meet the principles of the Howey Test, a Supreme Court case that has served as the basis for the past few decades to determine whether or not something is a security.
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Both parties have filed motions over the past couple of years without actually litigating the real issue: whether Ripple violated securities law by selling XRP. The motions for summary judgment mean that the parties are asking the court to decide, for good, whether the SEC or Ripple provided enough information to prove one way or another whether there was a breach.
The SEC argued, among other things, that various statements by Ripple executives demonstrate that the company sold XRP and that investors bought the cryptocurrency in the belief that their holdings would increase in value over time.
“Ripple publicly disclosed the various steps it was taking – and would take – to find a ‘use’ for XRP and protect the integrity and liquidity of crypto markets,” the SEC said in a filing.
Ripple, in turn, argues that there was no contract between the company and XRP investors, as well as, that there was no joint venture, one of Howey’s requirements. According to the company document, many of the XRP holders who buy through exchanges would not know who they were buying the tokens from.
“Even if the SEC engaged in a transaction-by-transaction belated review to identify XRP deals and sales with contracts, their claim would still fail as a matter of law. None of these after-sales agreements guaranteed rights to recipients against Ripple nor after-sales obligations imposed on Ripple,” the document said.
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