Ripple’s two-year battle with the US Securities and Exchange Commission (SEC) is coming to an end. The crypto company has filed a response and that appears to be its last line of defense.
Proud of defense Ripple
Ripple’s legal counsel, Stuart Alderoty, tweet that the company’s response was the final submission. He writes that the company asked the court for a ruling in favor of Ripple. Alderoty says the crypto company is proud of the defense it has made on behalf of the crypto industry.
Brad Garlinghouse, the CEO of Ripple agrees with ALderoty’s words. “Ripple stands strong and withstands the attack of the SEC.”
Right to sell XRP
The December 2 redacted response document argues that the SEC cannot prove the existence of an investment contract.
The company says that both founders of Ripple were entitled to sell XRP on foreign exchanges. According to the company, the SEC cannot provide material evidence to the contrary.
After nearly two years of pleadings, discoveries and filing motions, the SEC still can’t identify the alleged “joint venture,” can’t explain how XRP holders can meaningfully expect profits from Ripple’s efforts, nor can they responding to the point that many XRP recipients have not invested any money at all.”
It also reads that the SEC has failed to demonstrate that any offer or sale of XRP, let alone any of them between 2013 and 2020, was an investment contract under federal securities law.
XRP and Ripple Fail Howey Test
To determine whether an asset should be subject to securities laws, the Howey test is conducted.
In any event, the SEC has not carried its burden with respect to any of the three Howey elements. As to the first element, the investment of money, the SEC admits that billions of units of XRP circulated by defendants did not involve any money investment at all.”
“Even for transactions involving the exchange of money, the SEC has not been able to demonstrate that buyers invested that money in a mutual venture, as Howey requires, rather than simply buying an asset.”
One of the most important elements of the Howey test is whether the transaction can generate profit through someone else’s work. Ripple says the SEC has not been able to prove that investors profit from XRP if Ripple does work.
On the last element, earnings expectations based solely on the efforts of others, the SEC cannot remedy two fundamental flaws. First, there can be no reasonable expectation without actual commitments made by the promoter, and the SEC has not pointed to any.”
The SEC claims that defendants “made promises, but that empty claim doesn’t hold: No evidence of a ‘promise’ appears anywhere in the SEC’s fact-finding statements, and indeed, the only mention of a ‘promise’ cited by the SEC is a clear statement that Ripple did not make one.”
According to Ripple, the SEC cannot meet the Howey test and is therefore asking for a ruling in its favor.
Support from crypto community
The end of the lawsuit now appears to be in sight, and over the past two years, Ripple has enjoyed strong support from the crypto community. Dozens of US crypto companies such as Coinbase defended Ripple. In addition, a group of 70,000 XRPers has filed summary proceedings in defense of the company.
CEO Garlinhouse previously expressed the expectation that the lawsuit will end in the first quarter of 2023. For investors, it is hoped that the lawsuit will end soon. XRP’s price has missed the entire 2021 bull run due to the lawsuit.
Suppose the lawsuit ends quickly and Ripple wins, then it is quite possible that the price of XRP can take significant steps. Perhaps a shot can be made to surpass the all-time high of 2.82 euros from 2018.
