Ripple Labs and the Securities and Exchange Commission (SEC) clashed for the first time in a pre-trial hearing on February 22, 2021.
For information, Ripple was sued by the SEC under the U.S. Securities Act 1933 Sections 5 (A) and 5 (C). Meanwhile, CEO Brad Garlinghouse and chairman Chris Larsen appeared as defendants, accused of colluding with Ripple and making a personal profit of $ 600 million from the sale of XRP worth $ 1.38 billion.
The clash between the two sides was seen as tense when Ripple, represented by Andrew Ceresney of Debevoise & Plimpton, dropped a ‘bomb’, hitting the SEC as their suit was baseless as there was no clear notification in the market that XRP was determined as a security.
In fact, the SEC is seen as biased against other cryptocurrencies as it has taken up to 8 years since the existence of Ripple. Whereas in 2015, DOJ and FINCEN have decided XRP is a currency, and Bitcoin (BTC) and Ethereum (ETH) are not securities.
Ceresney also quoted in 2019 that there are crypto exchange platforms (exchanger) that send applications to list XRP in their trading platform, even the SEC did not block the action and did not raise the issue of altcoin is considered a security, "The exchange finally decided XRP as a non-security list the currency. ”
Last week, the SEC filed an amended complaint, claiming that the Howey Test once debated by former SEC chief Joseph A. Hall was enough to punish Ripple as the firm owns a large amount of XRP including those sold and offered to the public. It even invites speculation among investors who expect profits as a result of XRP ecosystem development efforts.
The SEC also presented the connection between Larsen and Garlinghouse on this issue: “Beginning in 2016, when Garlinghouse was still Ripple COO, these individuals acted and led Ripple’s efforts to make XRP open to investors to buy and sell on asset digital platforms. Both believe that this way they can sell it at a higher price or more accurately increase XRP trading volume. ”
However, Ripple slammed the statement by rejecting the Howey Test as a measure to the issue. They believe Howey Test has nothing to do with XRP as the token is sold as a non-security asset. In a 93-page court filing, Ripple asserted the SEC had no right to decide it was a security.
Apparently, the direction of this case is still vague. The SEC itself is still waiting for Gary Gensler who is nominated as the new chairman to be confirmed by the Senate. Meanwhile, the touted Biden administration will support the crypto sector as well.
The trial is expected to last until August 16, followed by a court hearing later.
