LAWSUIT ROUND 2
SEC vs RIPPLE
BIG WIN FOR RIPPLE
The Motion points to dismiss the SEC Lawsuit. It seems very likely to succeed and the SEC vs Ripple case will end sooner than expected.
Ripple is in a strong position after the successful representation by their lawyers in the pretrial discovery of the SEC vs Ripple case. Their lawyers had pointed out then that they will file a motion to dismiss the lawsuit. Brad Garlinghouse and Chris Larsen have gone ahead and filed the motion now.
There are four ways to end a lawsuit:
- (i) Settlement
- (ii) Successful Motion to Dismiss the Case
- (iii) In Summary Judgment
- (iv) A Trial in Presence of a Jury
The motion to dismiss the case filed by Ripple is in letter format. It was a four-page letter and that was the maximum number of pages allowed by the Judge for filing the motion to dismiss. Four pages were used fully by Matthew Ripples Solomon, Ripple’s attorney. Let’s look at the arguments made by Ripple’s attorneys:
Ripple’s Sale of XRP Tokens Was not Sale of Security
The first point made by Ripple is:
“The SEC Has Failed to Plausibly Allege that Mr. Larsen Had the Requisite State of Mind for Aiding and Abetting Under Section 15(b) of the Securities Act.”
Basically, their response says that the SEC will never be able to prove that XRP is a security. It is because XRP possesses no characteristics of typical security under the Howey test.
They also pointed out in their letter format that Ripple has not made any contracts with any buyers of XRP. All the transactions took place anonymously over an exchange.
SEC Fails to Allege that Chris Larsen Assisted Ripple to Carry out Sales of Unregistered Securities
The second point discredits the SEC’s second statement that Chris Larsen, the CEO of Ripple between 2012 to 2016, assisted the company to sell securities.
Ripple’s attorneys state in the letter that the SEC wasn’t meant to show that Ripple’s executives sold security. Instead, they were to prove that Ripple’s management sold securities knowingly and they knew what they were doing was illegal.
Speaking on this point made by Ripple’s attorneys in their motion to dismiss letter, Attorney Hogan says:
“The SEC won’t be able to prove that because even the federal government didn’t know that (If XRP is a cryptocurrency or a security).”
SEC Fails to Prove That it Has Jurisdiction Over the Sales of XRP
In the third point, the defendants mention that the SEC has failed in proving that each XRP sale took place within the United States. Hence, they do not have Jurisdiction.
“Here, the SEC must demonstrate either that the parties “incurred irrevocable liability” with respect to the transactions at issue, or that title to the security passed, in the United States.”
The defendants also state that the SEC claims that Ripple sold XRP tokens worth $500 million. But nowhere have they proved that even one of those XRP was sold in the United States.
The Monetary Claims Made by the SEC are Time-barred
Defendants pointed out that the SEC tried to circumvent the dictates of Morrison but was unsuccessful in it. Their motion filing mentions:
“Having attempted to plead a single, ongoing violation, however, the SEC has conceded that the entirety of its request for monetary penalties and disgorgement against Mr. Larsen is time-barred. It is now well-settled that the five-year limitations period of 28 U.S.C. § 2462 applies to any SEC claim for monetary relief, including disgorgement.”
Thus, Ripple’s lawyers have alleged that the SEC’s claim for monetary relief should be dismissed because the SEC’s claims against Mr. Larsen are barred by the five-year statute of limitations.
Summary – Ripple, SEC Lawsuit Update
Having successfully presented their case in the pretrial discovery, Ripple has presented pretty strong points in their motion filing to explain why the honorable court should dismiss the SEC vs Ripple case. It would be interesting to see how the SEC responds to points made by Ripple in their motion filing.
Do you think that Ripple will be successful in getting the case dismissed after the motion to dismiss? Let us know below in the comments.