Ripple co-founder Chris Larsen has asked a US court to dismiss the SEC’s claim that the company was in violation of securities laws. Larsen called the department’s arguments baseless.
In December, the US Securities and Exchange Commission (SEC) sued Ripple, CEO Brad Garlinghouse and co-founder Chris Larsen. The agency claims that in 2013, Ripple’s management sold unregistered securities to investors in the amount of $ 1.3 billion.
Last month, the SEC filed an updated lawsuit against Ripple in court. Larsen’s lawyers have filed a motion with Federal Judge for the Southern District of New York, Analisa Torres, to dismiss the charges against Larsen. Lawyers argue that even in the amended complaint, the SEC cannot provide tangible evidence of Larsen’s guilt.
The SEC claims that Larsen “knowingly or recklessly assisted another person in violation of Section 5 of the Securities Act of 1933.” However, during the ICO, Larsen was unaware that XRP was viewed by regulators as securities, the defense said. Arguments were also made that the US Department of Justice and the Financial Crimes Enforcement Network (FinCEN) considered XRP to be a “virtual currency”. This fact contradicts the SEC’s accusations.
“The SEC’s statements are not only incomplete, but also show that the Commission itself is unable to follow its own standards. At a minimum, the SEC must prove the evidence of a violation that XRP were indeed securities, and that Larsen was aware of this, taking part in the ICO, ”the petition says.
The lawyers said that the department was not able to confirm the fact that Larsen carried out transactions with XRP under the jurisdiction of the United States. According to lawyers, this omission would be “fatal” for the SEC’s claim. To speak of a violation, the SEC must clearly justify that each XRP sale was made within a Section 5. In addition, the SEC’s claim for monetary compensation is no longer valid as the statute of limitations expired back in 2018.
Larsen previously said that other countries have a much better attitude towards cryptocurrencies than the United States. Therefore, Ripple planned to move its headquarters to a jurisdiction with a more favorable regulatory environment.
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