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Ripple XRP legal chief Stuart Alderoty found fault with the U.S. Securities and Exchange Commission (SEC) brief asking the Court to deny crypto exchange Coinbase the motion to dismiss the SEC lawsuit. The agency had in its June 6, 2023 complaint accused the platform of operating as an unregistered national securities exchange, broker, and clearing agency.
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The XRP Ruling
In a filing on October 3, 2023, the US SEC said Coinbase was wrong to cite the XRP ruling wherein Judge Analisa Torres found that Ripple was not in violation of the US federal securities laws while selling the tokens to retail buyers. In the filing, the agency asserted that some of the crypto assets listed on Coinbase qualify as investment contracts under the Howey Test. Further, the agency said the token issuers invited investors “reasonably to expect the value of their investment to increase.”
Whether or not the issuers guarantee any profits out of the investments is crucial to determining the qualification under the Howey Test, which was also central to the landmark Summary Judgment in the XRP lawsuit delivered on July 13, 2023. In line with this, Judge Torres had on Oct0ber 4, 2023 denied the SEC’s motion to file an interlocutory appeal. The judge said SEC failed to explain how the Court “improperly applied the Howey Test” to facts of the Ripple lawsuit.
US SEC Claims: What’s To Support
Meanwhile, Ripple’s Alderoty said the SEC’s brief in the Coinbase lawsuit was baseless, explaining that its claims lacked “citation or support.” The SEC’s claims on applying Howey Test to crypto assets were criticized earlier by the likes of John Deaton, the lawyer who represents the thousands of XRP token holders in the SEC lawsuit. Deaton maintained that the SEC could not cite a single lawsuit in which the sale of crypto tokens was linked with the application of the Howey Test.
There is so much wrong with the SEC’s brief in the Coinbase case I don’t know where to begin. Let’s start with the SEC claiming, without citation or support, that digital assets have no innate or inherent value while collectible baseball cards do.
— Stuart Alderoty (@s_alderoty) October 5, 2023
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