Both the US Securities and Exchange Commission and Ripple Labs filed motions for summary judgment, contending that a judge hearing the case had enough information to make a conclusion without proceeding to trial.
The SEC and Ripple Labs both want a federal judge to determine either that the crypto business associated with the XRP cryptocurrency violated federal securities laws or that the complaint be dismissed without requiring a protracted trial.
Both the SEC and Ripple filed applications for summary judgment in the Southern District of New York, requesting that District Judge Analisa Torres rule on the arguments presented in accompanying documents. On Friday, the documents were uploaded to a federal court database.
In December 2020 (a day before former SEC Chair Jay Clayton stepped down from the job), the SEC sued Ripple Labs, CEO Brad Garlinghouse, and Chairman Chris Larsen on charges that it raised more than $1.3 billion by selling XRP in unregistered securities transactions. Ripple contended that XRP sales and trading did not meet the fundamentals of the Howey Test, a Supreme Court ruling that has been used for decades to decide whether something is a security.
Over the last two years, the parties have filed multiple discovery motions without truly addressing the main question – whether Ripple violated securities legislation by selling XRP. The motions for summary judgment suggest that the parties are asking the court to decide whether the SEC or Ripple has produced enough evidence to prove if there was a violation.
The SEC said, among other things, that different remarks by Ripple officials show that Ripple sold XRP, and XRP investors purchased the cryptocurrency with the expectation that their holdings would increase in value over time.
“Ripple publicly highlighted the many actions it was and would take to find a ‘purpose’ for XRP and maintain its integrity and liquidity.”
One of Ripple’s objections was that there was no contract between the firm and XRP investors, and that there was no common enterprise, which is one of Howey’s prerequisites.
According to the company’s filing, many XRP holders who purchased tokens through exchanges would not have understood who they were acquiring the tokens from.
“Even if the SEC conducted a post-discovery transaction-by-transaction analysis to uncover XRP offers and sales with contracts, its claim would still be barred by law. None of those contracts offered recipients post-sale rights against Ripple or imposed post-sale responsibilities on Ripple to behave in their best interests “According to the complaint.
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