Ripple vs SEC
In December 2020, the SEC charged Ripple with violating the Securities Act of 1933. According to the Act, securities must be registered with the SEC which they allege Ripple did not do. A security is defined as a tradable financial asset that is used to raise capital. The SEC is of the opinion that Ripple created the expectation that XRP investors could see profits from Ripples efforts.Ripple’s defence is that SEC regulations are unclear on the matter and filed for a motion to dismiss the case on grounds of “lack of due process and fair notice.” Furthermore, Ripple is arguing that XRP is not a security but rather “a digital asset for real-time global payments.” The outcome of this case is very important to the whole crypto industry. If XRP is declared a security, it could put the future of other cryptos in jeopardy.
Court dismisses SEC motion
As previously stated, the court ruled in favour of the admission of Ripple’s fair notice defence. In layman’s terms, Ripple is arguing the SEC neglected to notify them that the agency would consider XRP a security. They did not know that they were potentially embarking on an illegal token sale. Hence, they did not give Ripple a fair notice and denied the company due process.Judge Torres’s ruling on Friday, 18 March to dismiss the SEC’s motion has been a major turn in the case. Ripple can potentially use the fair notice defence to win the case.
In an interview with Bloomberg TV, Garlinghouse said the United States is the only country that considers XRP a security. “We work successfully in the UK, in Switzerland, in Japan, in the UAE, in Singapore. All of these countries have acknowledged XRP is a currency because that’s how it’s used,” Garlinghouse told reporters.
Is Ripple a security or not?
A 49-page document regarding the classifications of cryptocurrencies, was made public during the last court hearing. This document from Perkins Coie, an international law firm that provides legal advice on the classifications of cryptocurrencies, was given to former Director of SEC’s Division of Corporation Finance, Williams Hinman. In the document, it is stated that XRP is not classified as a security. The document is of vital importance to the case as it served as legal advice to the SEC that eventually led to Hinman listing Ethereum and Bitcoin as non-security.In the latest news, Ripple argued that a summary judgement schedule with opening briefs and related filings should start in mid-May. The SEC, however called this “premature” and asked for an extension.
In conclusion, it seems highly unlikely that the historic case of the SEC vs Ripple will be concluded by May. This presents the ideal opportunity to buy some more XRP tokens on South Africa’s favourite cryptocurrency exchange, AltCoinTrader before the coin truly goes to the moon.