Ripple Labs and the US Securities And Exchange Commission (SEC) have both filed motions for a summary judgment.
Both parties have argued that the judge overseeing the case has enough information to make a ruling instead of letting the case move to a potentially lengthy trial.
Motions For Summary Judgment Filed
It looks like both Ripple Labs and the Securities and Exchange Commission (SEC) are ready to conclude the lawsuit and bring their case to a close. In separate motions filed at the US District Court for the Southern District of New York, both parties asked the presiding judge, Judge Analisa Torres, for a summary judgment on the case which began in December 2020. A summary judgment is a type of judgment delivered based on evidence filed and statements recorded instead of letting the case go to trial.
The documents related to the motions filed by both parties were posted to a federal court database on Friday. Typically, summary judgment motions are filed when both parties do not wish to contend the facts associated with the case and want to avoid a potentially lengthy trial.
The Lawsuit Against Ripple
The SEC had, back in 2020, sued Ripple, alleging that the platform had raised over $1.3 billion by selling the native token, XRP, in unregistered securities transactions. Chris Larsen, Ripple Executive Chairman, and Brad Garlinghouse, Ripple CEO, were both listed as co-defendants in the lawsuit, with the SEC alleging they actively aided and abetted the illegal moves made by Ripple.
On its part, Ripple has consistently maintained that the sale of its native token and trading did not meet the requirements of the Howey Test. The Howey Test refers to a US Supreme Court case that has often been used as a yardstick to determine if an asset is a security or not for several decades.
A Litany Of Discovery Motions
Since the case began in 2020, both parties have filed several discovery motions. However, the primary underlying issue, whether Ripple violated securities law by selling XRP, was not really litigated. With the summary motions filed by both parties, the court will now decide whether the Securities and Exchange Commission or Ripple have provided enough proof to prove if there was a violation of securities law or not through the sale of XRP.
The SEC Arguments
In the new filings, the SEC argued that the statements by Ripple executives prove that Ripple Labs sold XRP, with investors purchasing the cryptocurrency believing that its value would spike significantly over time. The SEC stated in its filing,
“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.”
The SEC further stated that Ripple does not deny offering XRP for money, which meets the “investment for money” criteria of the Howey Test and thus should be considered as selling of a security. The SEC website states that under the Howey Test, an investment contract exists when there is an investment of money in an enterprise, with the expectation that profits can be derived from the efforts of others.
Ripple’s Counter-Filing
Ripple, in its counter-filing, retorted that it had nor has any contract with the recipients of XRP, further adding that it was not even involved with most of the XRP trades since they occurred in the secondary market. The platform has also argued that the SEC does not have any jurisdiction over XRP, as it was sold on overseas exchanges. It is also countering that XRP is not a security under the Howey Test since it does not involve an investment contract.
Ripple stated in its motion,
“When asked in discovery, the SEC refused to identify a contractual basis for a single offer and sale of XRP. Thus, because the Securities Act’s definition of an ‘investment contract’ requires an underlying contract, the SEC has no case to take to trial.”
In a Tweet, Ripple CEO Brad Garlinghouse lashed out at the SEC, tweeting,
“Today’s filings make it clear the SEC isn’t interested in applying the law. They want to remake it all in an impermissible effort to expand their jurisdiction far beyond the authority granted to them by Congress.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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