The SEC lawsuit against Ripple and two of its executives for the sale of unregistered security brought doom for the crypto company in the US. Ripple in its initial response refuted all claims of XRP being security and even reassured their customers that they would eventually come out as a winner. The firm has now come out with a detailed official response to the allegations put against the company in the lawsuit.
Today, we filed our preliminary legal response to the SEC’s complaint. With it, we start to set the record straight and correct many misconceptions and contradictions within their allegations. 1/5 https://t.co/8KVBuSzCGH
— Stuart Alderoty (@s_alderoty) January 29, 2021
Ripple in its official response to the lawsuit claimed that the worst affected by the SEC lawsuit were retail investors as the price of the XRP fell by over 50% in the wake of the lawsuit.
since the SEC filed its complaint, XRP lost almost half of its market value, causing retail holders of XRP with no connection to Ripple– the very people the SEC purports to protect – to suffer billions of dollars in losses. What’s more, part of the SEC’s mission is to maintain orderly markets… and yet their overreach created havoc in the market.
Ripple Accuses SEC of Distorting Facts
Ripple went onto allege that SEC was picking sides rather than being unbiased, as at one point they even claimed Ethereum could qualify as a security, and with time it gained the status of an asset class and XRP could very well fit in that same bracket.
Ripple also accused SEC of destroying the facts in the lawsuit filing by cherry-picking the quotes and data to show it in a bad light. The firm said,
Through our response, we start to clarify the record. While we can’t get into all of the specifics in this format (that will happen as the case progresses), you’ll see we denied many of the SEC’s allegations. In time you will see why.
Ripple also offered a quote from Andrew Ceresney, of Debevoise & Plimpton who has reviewed the case and suggested that SEC chose to overlook key facts such as XRP being traded across the world without any regulatory interference.
As per Andrew, SEC’s case is unprecedented and ill-conceived. The SEC has ignored XRP’s clear status as a virtual currency, contradicting not only the findings of other U.S. regulatory agencies but also international regulatory regimes. Over the last eight years, the XRP market, independent of Ripple’s activities, had grown to a massive scale- trading on over 200 exchanges worldwide. The SEC is now stretching the concept of an “investment contract” beyond its breaking point.
When asked about his views on the topic, Gabor Gurbacs, Director at VanEck said,
It’s unclear whether XRP is a currency or security at this point. There is no regulatory consensus on this matter.
Ripple Refutes SEC Claims of XRP Being an Investment Contract
SEC accused Ripple of knowingly selling a form of security or an investment contract to buyers despite knowing that it might get deemed as security under current regulations and further hyped its price through social media and other channels to pump its price. Ripple in its official response refuted all claims of being a security or a form of investment contract between two parties.
Ripple claimed that XRP is a virtual currency that has built its market for over 7 years. The firm said that claims of being an investment contract do not hold ground as they never held an ICO or promised future tokens. The fintech firm offered a summary of its response filing which read,