Is XRP on the verge of RIP? Ripple’s recoil to SEC

Now I have some news for you. Another progress has occurred in the regulatory brawl between the Securities and Exchange Commission (SEC) and Ripple regarding the selling and classification of cryptocurrency XRP.

The SEC recently sent a letter to the ruling judge alluding to a motion that would bar the authority from requesting data related to the transfer of XRP to crypto exchanges located outside of the United States.

Without this evidence, which Ripple insists it does not have, the SEC cannot create a timeline that might prove Ripple purposefully pursued a marketing campaign intended to boost the price of XRP.

But what really happened here? Grab a cup of coffee while we go few months back.

SEC in Lighting the Wick

On December 20, 2020, The Securities and Exchange Commission (SEC) of the United States brought a complaint against Ripple, the corporation behind XRP, one of the world’s biggest cryptocurrencies.

The firm, as well as CEO Brad Garlinghouse and President Chris Larsen, were investigated by the SEC on suspicion of violating federal securities legislation by selling XRP to individual investors.

The argument was predicated on the classification of XRP as a security (i.e. a financial commodity on which the holder expects to profit) rather than a currency or medium of trade. Ripple breached several provisions of the Securities Act of 1933 by failing to submit a securities registration statement or request special exemption, according to the official lawsuit.

The SEC wrote,

“Over the course of many years, Ripple was able to collect at least $1.38 billion by selling XRP without including the kind of financial and administrative detail usually contained in registration statements and associated annual and current filings”

The regulator also accused the business of using funds created by the selling of XRP to establish fictitious use cases that could be used to explain the cryptocurrency’s classification as a currency rather than a protection.

The regulator said,

“Ripple used this capital to finance its activities without revealing how or the complete scope of its fees to others to help in its attempts to create a ‘use’ for XRP and retain XRP secondary trading markets”

The corporation is also accused of creating a “knowledge void,” which enabled Garlinghouse and Larsen to become industry puppeteers, releasing only selected information to prospective investors.

Following the release, the price of XRP plummeted to $0.3 per share, erasing more than a third of the cryptocurrency’s market capitalization.

Ripple, for one, believes XRP should not be listed as a security. The lawsuit, according to Garlinghouse, is an “assault on the whole crypto sector and American invention.” Ripple claims in its Wells Submission, a filing that requires claimants to reply to any complaint filed against them, that in relation to SEC’s theory “that XRP is an investment deal, is false on the evidence, the rules, and the equities.”

“The SEC’s accusation disregards the economic fact that XRP is and has long been a digital commodity with a completely functioning ecosystem and a real use case.”

When Ripple’s Magazine Became Loaded

On April 9, 2021, Ripple’s regulatory brawl with the Securities and Exchange Commission (SEC) about the selling and classification of cryptocurrency XRP has received a reinforcement.

A motion has been authorized giving Ripple admission to internal SEC correspondence, which the company hopes would show that XRP has already been represented in words identical to Bitcoin and Ether, none of which is the target of an SEC complaint.

The decision, according to the ruling judge, would enable Ripple to inspect SEC messages “expressing the agency’s analysis or opinions on cryptocurrency,” however it will not authorize the firm to access correspondence between SEC employees.

Ripple’s counsel, Mathew Solomon, said the decision could mean “game done” for the appellant. If Ripple can demonstrate that the SEC has at any stage treated XRP as a non-security, it will be able to contend that the cryptocurrency should be exempt from the authority’s regulation.

When analyzing the documentation, the Ripple defense staff is likely to concentrate on the many years it took the SEC to bring the case in the first place.

With access to fresh data, Ripple hopes to bring this current controversy to bed and get it over with, providing a valuable reference point for potential cryptocurrency companies throughout the process.

Ripple’s Side Shook the Table

Many people predicted that XRP would slump and Ripple would lose partners and volumes in December. Although there was a short delisting spree, both have recovered pretty well since then.

The aforementioned case was discussed by Ripple CEO Brad Garlinghouse during a recent interview. Following a number of “tiny wins” in arbitration, there has been much debate about how the case is going and what the “ideal result” will be. According to Ripple’s CEO,

“I believe the SEC is incorrect on the evidence and the rules, and I believe the way this has played out demonstrates that.”

The judge’s decision to approve Ripple’s discovery request surrounding the SEC’s internal conversations on Bitcoin and Ether’s status, according to Garlinghouse, has been the “most consequential,” with the executive adding that doing so may offer additional accountability and clarification.

Clarity, in particular, will be part of the desired result the defendants are hoping for from the case, according to Ripple, with Garlinghouse also using the chance to emphasize the fact that rules in the United States are currently very fuzzy on the issue of digital properties. The suspects, rather than all, want “closure, assurance, and clarity” from the lawsuit, according to the executive.

Over the last few months, Ripple has positioned the case as a “us v. them” tale, a lawsuit that is an assault on the whole crypto industry. As a result, it’s no surprise that the blockchain company is looking for clarification above all else.

But how can that consistency be achieved? Garlinghouse elaborated on the lawsuit, saying that it would provide Ripple with “additional opportunity to connect with the SEC.”

“We must either negotiate a clear resolution that ensures that consistency and assurance, or we must leave that judgment to the judge.”

Finally, the executive optimistically elaborated on the likelihood of legislation coming to the rescue, particularly as the SEC’s thinking process of “regulation as rule-making” has been shown to be completely “inefficient.”

Interestingly, SEC Commissioner Hester Peirce said something similar in January, with the official saying,

“Compliance isn’t always the right way to establish legal guidance.”

It should be noted, though, that Peirce was swift to apply the disclaimer that her comments may not reflect the opinions of her peers or the SEC at the moment.

What to Expect?

The regulator is now battling to keep its right to obtain intraday trade data for XRP through international trading platforms.

“While the SEC has tried to procure this knowledge directly from Ripple, Ripple recently informed the SEC that Ripple also does not have it, leaving the main path for inquiry offshore,” the letter explains.

However, it does not seem that the investigations are off to a good start, with appeals to nine separate international regulators coming up short. According to the letter, two regulators declined to help, while three others refused to encourage the SEC to reveal their correspondence. Only one regulator indicated that the SEC would be able to use the communications between the two parties to further the argument.

If the judge grants Ripple’s petition, the SEC will be required to stop and remove inquiries submitted to international regulatory agencies, potentially ending this line of inquiry.

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Originally published at https://eliteclubsignals.com on April 27, 2021.