During the hearings in the SEC case against Ripple, lawyers for the fintech startup said that the Commission should have warned market participants that XRP is a security.
Preliminary public hearings were held yesterday in the Securities and Exchange Commission (SEC) case against the fintech startup Ripple. The process took place in the format of a conference call and anyone who wanted to dial a certain number at the right time could participate in the process. Cryptocurrency backers have done recording the meeting, which ended with a cry of “XRP to the moon”. At the time of this writing, the video is blocked by the copyright holder.
Important details in the Ripple case
Ripple CEO Brad Garlinghouse was represented by Matthew Solomon of Cleary Gottlieb, a law firm. During the hearing, he stated that the status of the XRP token was discussed many times during 2019 and earlier. However, the Commission has never warned market participants, including exchanges, that it qualifies as a security.
“We found out that the Securities and Exchange Commission consulted with experienced market participants, including exchanges, and apparently did not tell them as of the end of 2019 what it considers XRP to be a security or investment contract. Again, in the course of the proceedings, these facts will come to light, and it will become clear that XRP cannot be considered a security. ”
The defense refers to the fact that during the investigation, a certain exchange was discovered that consulted with the SEC about the status of XRP before listing the coin. However, the regulator did not give a conclusion that the token is a security. The name of the exchange was not announced.
Some community members consider this fact to be the main one in the whole case, proving the unfoundedness of the SEC’s claims against Ripple and its leaders. However, not everyone shares this opinion, noting that there is too much understatement and assumptions in the case.
From the Ripple/SEC hearing, the biggest news drop was that the Defendants have proof that the SEC has had discussions with many market actors and exchanges re XRP, in 2019 and before, and never told them that XRP was a security or sold as a security. HUGE DUE PROCESS ISSUE
— Jesse Hynes (@jesse_hynes) February 22, 2021
Ripple petitions to dismiss claim
Garlinghouse has already filed a motion to dismiss the Commission’s claim, Solomon said.
The lawyer denies that the company’s management manipulated prices and contributed to the token sale – this accusation is at the heart of the amended SEC lawsuit. However, he insists that his client did not know that XRP could potentially be classified as an investment contract:
“The SEC’s statements are the opposite of the reality. Garlinghouse did not know, or did not consider the possibility that the XRP token could be regarded as an investment contract. ”
Former Ripple CEO Chris Larsen was represented by attorney Martin Flumenbaum of Paul Weiss. His client also intends to raise this issue in the motion to dismiss the claim.
George Gerardo Tenreiro, John Daniels and others were on the side of the SEC. They continue to insist that the company issued and sold an unregistered security.
The meeting lasted about 30 minutes. The results of the preliminary hearing are not yet known.