The Battle has Begun!
It has been a month since the SEC filed a lawsuit against Ripple and its founders. In their lawsuit, the SEC alleged that Ripple’s crypto tokens XRP is unlicensed security, and Ripple has sold billions of dollars of unsold securities in the form of XRP tokens. Ripple is giving a tough fight against the SEC. They are going all out to prove that XRP, just like popular cryptocurrencies Bitcoin & Ethereum are cryptocurrencies and not securities.
The legal battle between Ripple and SEC is turning out to be the crypto world’s version of David vs Goliath. So, who is Goliath here, according to you? If you are thinking that the SEC is Goliath here, then you are mistaken. Ripple is the Goliath here as 24 lawyers are representing them against SEC’s 2. Recently, Ripple took an unusual step that no one would have predicted.
Ripple, the company behind the popular cryptocurrency XRP, filed a Freedom of Information request with the Securities and Exchange Commission. With this, they asked the SEC to release the documents showing how they concluded that Bitcoin and Ethereum are not securities and are cryptocurrencies.
What Exactly is Ripple Asking for From the SEC?
In its letter to the SEC, Ripple has asked for communication between the SEC and the creators of Ethereum. It also includes Joe Lubin and Vitalik Buterin. They have also demanded that the SEC share the letters from Jay Clayton, the former SEC Chairman, agency staff, and the members of Congress.
A Key Part of Ripple’s Strategy to Rebut the SEC’s Allegations
Asking for documents from the SEC under the Freedom of Information Act (FOIA) is a part of Ripple’s strategy to prove SEC’s biased approach when it comes to Ripple.
In their reply to SEC’s allegations, Ripple has denied that the billions of dollars of XRP they sold constitute investment contracts. Ripple said that the ups and downs in the prices of XRP are not related to the business activities of Ripple. They have also drawn parallels to other organizations like the Justice and Treasury Departments, saying that these organizations consider XRP to be a currency and not a security.
Ripple claims in its court filings that the SEC’s lawsuit has resulted in a loss amounting to $15 billion to the company. They pointed out that, by this, the SEC is damaging the investors who they claim to be protecting.
Pointing out the SEC’s cherry-picking about what constitutes as a cryptocurrency and what doesn’t, Ripple’s court filing said:
“The SEC’s filing, based on an overreaching legal theory, amounts to picking virtual currency winners and losers as the SEC has exempted bitcoin and ether from similar regulation.”
Owning XRP tokens ≠ Ownership Claims in Ripple
The SEC has alleged that Ripple is selling XRP tokens as unregistered security under the garb of a cryptocurrency. They say that Ripple is enriching themselves by selling XRP tokens to gullible investors.
Ripple has defended itself against SEC’s allegations saying that owning XRP tokens doesn’t give anyone ownership in Ripple. Instead, Ripple is on a mission to persuade various banks and financial institutions to use Ripple’s software and facilitate global money transfers through its XRP tokens.
Ripple wants to prove that the SEC is taking a biased approach by calling Bitcoin and Ethereum as cryptocurrency and XRP as security. Their focus will be on the 2018 conclusion of the SEC. It’s because, in 2018, SEC said that Ethereum is not a security, regardless of Ethereum allowing outside buyers an opportunity to invest through Initial Coin Offering early.