Ripple has filed a motion seeking dismissal of the suit ahead of the trial in federal court in Manhattan. The blockchain firm contended that the crypto-asset at the center of the ongoing legal battle – XRP – cannot be considered a security.
In a recent filing over the weekend, Ripple argued that there was no “investment contract” that granted investors rights or required the issuer to act in their interests.
Ripple-SEC Nears The D-Day
As per the report, Ripple further alleged that the United States Securities and Exchange Commission’s (SEC) “untethered position” could deem the sale of all types of ordinary assets, including diamonds, gold, soybeans, cars, and art, into sales of securities. Ripple added that the agency was not granted such authority by Congress.
In the filing, the San Francisco-based firm mentioned that the SEC’s claim would fail and cited the lack of documents granting post-sale rights to recipients as against Ripple or imposed post-sale obligations on the firm to act for the benefit of those recipients.
In a statement, Ripple General Counsel Stuart Alderoty said,
“The filings show that the SEC is acting outside their legal limits. The SEC is not looking to apply the law – they are looking to remake the law in the hopes that it can impermissibly expand their jurisdiction.”
Call For Immediate Ruling
The SEC sued Ripple Labs, CEO Brad Garlinghouse, and Chairman Chris Larsen in December 2020. The agency alleged that all the above-mentioned entities connected to Ripple secured more than $1.3 billion by selling XRP in “unregistered securities” transactions.
The watchdog stayed firm in its stance and said that “Ripple funded its business by touting XRP’s profit potential, selling and distributing XRP to public investors while keeping a large amount of XRP for itself.”
The blockchain firm, on the other hand, has continued to maintain that the sales of the crypto-asset and trading did not satisfy the Howey Test, a US Supreme Court case for establishing if a transaction qualifies as a security.
Both Ripple Labs as well as the SEC have filed separate motions calling in the US District Court Southern District of New York to make an immediate ruling on whether the XRP sales violated the country’s securities laws.
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