Did the SEC get it wrong with Ripple?

As the SEC’s lawsuit with Ripple continues wearily for the past two years, it seems increasingly clear that it can only end negatively for the prosecution.

Ripple seems to be gaining the upper hand against the SEC 

The matter is becoming well known partly because it has been occupying the headlines in the crypto world’s legal news for about two years now. In December 2020, the SEC, the US Securities and Exchange Commission, accused Ripple Labs of selling some of its tokens without having the authorization to do so. The company countered that this sale should not have been regulated, since it was not securities.

Over the past weekend, Ripple filed a motion asking for the case to be dismissed before the trial can finally land in Manhattan federal court. The company argued that XRP could not be considered a security because there was no “investment contract” that guaranteed rights to investors or required the issuer to act in their best interests. 

But the SEC seems to want to continue in its prosecutorial conduct aimed more at stalling for time, citing reasons that have all the appearance of being mere legal ploys to stall for time, in anticipation of some unpredictable news, perhaps on the regulatory side of the crypto world.

In the last few hours, the clash seems to have become tougher, considering that Ripple is convinced that it has brought before the judge all the evidence needed to completely exonerate itself from the charges brought against it. And it accuses the SEC of having a now purely persecutory attitude:

“The SEC’s untethered position would convert the sale of all types of ordinary assets – diamonds, gold, soybeans, cars, and even works of art – into sales of securities. Congress has given the agency no such authority.” 

The SEC continues undeterred on its path

Yet the SEC, convinced of its action, countered by filing a motion, asking for the conviction of the crypto company:

“Defendants cannot dispute the content of their many public statements about Ripple and XRP,” the SEC said. “Nor can Defendants dispute either the vast record of the efforts they made consistent with those representations or the economic reality: Ripple funded its business by touting XRP’s profit potential, selling and distributing XRP to public investors while keeping a large amount of XRP for itself.”

Ripple has now, in its view, brought to its detriment documentary evidence and testimony that would prove that it has not broken the laws at all, as on the other hand the SEC has been claiming for two years. Judge Sarah Netburn denied the SEC’s request in August to withhold some of this documentary evidence (in particular, the statement of a former SEC executive that would appear to deny the possibility that the XRP token could be considered in the same way as security), a decision that seemed to be final to end the dispute. 

However, the SEC seems unwilling to give up even in the face of the near-evidence of the facts.

All that remains to put an end to it is to wait for this abbreviated trial requested by Ripple, which should lead, within about two months, to the final ruling, which seems, in view of the latest trial events, to be favourable for Ripple.