Brad Garlinghouse, the CEO of Ripple has filed a motion to dismiss the Security and Exchange Commission’s amended complaint against him calling it a regulatory reach. The SEC filed a class-action lawsuit against Ripple and two of its executives back in December 2020, accusing the decedents of selling unregistered security in the form of XRP and manipulating the market via media using social media to increase XRP’s price.
Today, a letter was filed on my behalf indicating my intent to file a Motion to Dismiss in response to the SEC’s amended complaint against me. Simply put, the SEC’s allegations are regulatory overreach. The letter speaks for itself: https://t.co/bwj9YdDOQw
— Brad Garlinghouse (@bgarlinghouse) March 3, 2021
The letter says,
what is fatal to the SEC’s aiding and abetting claim is the lack of any plausible allegations that Mr. Garlinghouse’s state of mind ever crossed over from general awareness of the risk inherent in the digital currency space that a digital asset could be classified as security if certain criteria were met, to knowledge or recklessness that Defendants’ transactions in XRP specifically were or are investment contracts or that Ripple was somehow doing something wrong. Without this, the SEC’s aiding and abetting claim must be dismissed.
Would Ripple Come Out Victorious Against SEC?
The first virtual court hearing for the case started in February, however just before the first court date, SEC made some key changes in its court filing where it excluded market manipulation claims. Later during the court proceedings, Ripple’s legal counsel revealed that major cryptocurrency exchanges in the US approached SEC in 2019 enquiring about the status of XRP and whether they can offer and sell XRP from their platform. Reportedly, SEC ignored these queries and didn’t sound any warning against offering XRP from their platforms.
SEC’s lawsuit against Ripple was seen as the end of the road for Ripple in the US by many, as it was the first time when the regulatory body was going after the executives of a crypto company for the unregistered sale of a security. Prior to the Ripple lawsuit, SEC had also charged Telegram and Kik for a similar offense, but their respective executives were not involved. However, after the first court hearing and SEC’s amendments to their complaint, it seems Ripple has an upperhand in the case.