Ripple Maintains “Lack Of Clarity” Defense In SEC Case

Key Takeaways

• Ripple's legal team has published a new legal filing.
• Ripple maintains that certain members of the SEC have expressed a lack of clarity around securities regulations.
• Some estimates suggest the case will end in 2022.

The legal firm defending Ripple has published a new defense in the company’s ongoing legal dispute with the U.S. SEC.

Background On The Case

The U.S. Securities and Exchange Commission initially claimed that Ripple’s sales of the XRP token constitute an unregistered securities offering. It also claimed that Ripple leaders Brad Garlinghouse and Chris Larsen aided and abetted those sales.

Earlier this month, Ripple’s legal team disputed those accusations by arguing that two individual Commissioners expressed uncertainty around securities regulations in cases against other startups.

The SEC responded to that argument by calling those statements “irrelevant” to its claim that Ripple sold unregistered securities.
The regulator maintains that it “is not required to prove that the individual defendants knew or recklessly disregarded the legal consequences of their actions.”

Ripple Doubles Down

Now, Ripple has answered by doubling down on its original argument. In a July 23 letter, Ripple’s legal team argued that there is a “decided lack of clarity” over securities status.

“The SEC has alleged nothing improper about selling XRP other than its claim that those sales required registration with the SEC as a security,” Ripple’s team says in the letter. It also says that the SEC must show that the individual defendants “knew or recklessly disregarded” XRP’s alleged classification as a security.

Ripple’s legal team also argued that other high-profile SEC cases—most notably those against Kik and Telegram—do not support accusations of aiding and abetting, as those cases did not involve accusations against individual defendants.

What’s Next For The Case?

James Filan, a lawyer in the Ripple community, wrote that the case is not yet close to a conclusion. “I don’t think that anyone should expect a settlement anytime soon,” he wrote. “The [SEC] is not giving up and based on everything I’ve read, Ripple will not give in.”

Filan has speculated that Ripple successfully brought forward testimony from former SEC member William Hinman. He also speculated that the company is using information gained from that deposition to interview others involved with the SEC.

Some estimates suggest that the case will conclude in early 2022.

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