In its legal battle with the United States Securities and Exchange Commission (SEC), the US blockchain startup Ripple intends to argue that its token, Ripple (XRP), cannot be considered a security in the absence of contracts since there isn’t an “investment contract” that would provide investors rights.
The major accusation made against the business by the American authority appears to be that XRP is unauthorized security, which Ripple refutes. According to Bloomberg, the blockchain company filed a motion to have the lawsuit dismissed before the hearing in a Manhattan court, marking another chapter in the legal saga.
Although the decision may be effective legally, some XRP investors may find it troubling that Ripple believes individuals who buy its coin are denied of the privileges that are typically granted to investors.
This month earlier, both sides were told for a quick decision in the case against the company. This gave XRP investors hope that Ripple’s legal problems would be resolved quickly, thus increasing the value of its native asset.
According to court documents submitted on September 18, the involved sides are asking for a “directed verdict,” which means that neither petitioner nor the offender wants the case to undergo a full trial.
“Today’s filings clearly demonstrate the SEC’s lack of interest in upholding the law. In an unlawful attempt to extend their jurisdiction well beyond the power given to them by Congress, they want to reinvent everything, according to Ripple CEO Brad Garlinghouse in a tweet on the day the paperwork was submitted.
The company’s general counsel, Stuart Alderoty, said that, in his view, “after two years in court, the SEC is unable to locate any contract for investment” (that is, that is what the legislation demands).
Ripple: What Is It?
The native coin of the California-based startup Ripple Labs is called Ripple (XRP), and it ranks among the top three digital currencies in terms of market value. The startup uses blockchain technology to assist banks in enhancing cross-border transactions, albeit some of its services need the token.
Chris Larsen and Jed McCaleb came up with the idea for the Ripple platform back in 2012 with the intention of revolutionizing the worldwide infrastructure for digital transactions, settlements, and the exchange of financial assets.
Traditional banking institutions have shown they are behind the Ripple initiative. Many organizations, banks, as well as other financial service providers now use one of the three Ripple products, including Standard Chartered Bank & American Express.
The platform resolves payments in only four seconds, making it one of the quickest ones available right now. Additionally, it can handle a maximum of 1,500 transactions each second (TPS). Banks consider the speed of settlement to be advantageous since it boosts client satisfaction. Additionally, the TPS figure indicates that the platform can sustain a high number of users, which is a need for many digital currencies to operate and provide services, including bitcoin.
Your capital is at risk.
SEC Caused an Increase in XRP Prices
The XRP developer Ripple Labs and the US government oversight body both submitted requests for summary judgment over the weekend. Simply put, they both requested that the “unregistered securities” litigation be resolved without a jury trial from the federal judge.
The Commodity Futures Trading Commission (CFTC) Commissioner Caroline D. Pham, who is in charge of monitoring the US derivative markets, met with Ripple’s CEO Brad Garlinghouse the next day. Her visit caused a stir in the XRP community despite the fact that no parties announced its purpose.
Legal experts claim SEC’s arguments might undermine its regulatory authority
The filings from Ripple Labs and the SEC revealed very distinct arguments and argument areas notwithstanding the agreement on the preliminary injunction, which could have an entirely different influence on the market at the conclusion of the proceedings.
The SEC filings, as per attorney Jeremy Hogan, were narrowly focused on Ripple’s sales and marketing and “just on the facts concerning this case,” but Ripple Labs argued for a more general interpretation of what an “investment contract” is.
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