When debating whether or not XRP, the seventh biggest cryptocurrency in the world, is a security, both Ripple and the U.S. Securities and Exchange Commission accused the other side of overreaching. In documents submitted on Dec. 9, both parties asked the U.S. District Judge Analisa Torres to decide in their favor without scheduling a trial.
The case is getting closer to a decision that might further define whether digital assets are regarded as securities in the U.S., thanks to the final batch of briefs requesting summary judgment. The judge may decide to limit the topics that are shown to the jury or grant either side a victory without a trial.
Another Crypto Project Lost Their Case Against SEC Recently
The legal team behind the LBRY decentralized content platform recently lost a case to the United States Securities and Exchange Commission (SEC), and the business has since announced that it is probably closing down. Since many in the sector fear that Ripple may meet the same fate, this setback has set nerves on edge.
In March 2021, the SEC filed a lawsuit against LBRY Inc. over its LBRY Credit (LBC) tokens, claiming that the company had been marketing unregistered securities since 2016. On Nov. 7, last month, a judge declared the tokens to be securities, dealing a devastating blow to the industry. The SEC ultimately prevailed in that dispute.
Following the LBRY Defeat to SEC, US attorney John Deaton gave his opinion on whether it will affect Ripple’s case or not. In the event that LBRY lost, he said that he anticipated two things would occur.
Either the SEC would expedite the verdict to Judge Torres as if the Supreme Court had already ruled, or people would emerge from the shadows and assert that Ripple and XRP will suffer a similar fate.
In his opinion, the LBRY loss to the SEC won’t harm Ripple’s position. He claims that while the LBRY case is not in the 2nd Circuit, the Ripple case is. Additionally, Ripple and XRP holders, who were granted Amicus by the Judge more than a year before any other Amici joined, vehemently contested the common enterprise prong of Howey. LBRY did not contest the common enterprise factor.
What is the Howey Test Prong?
An investment must pass the Howey test in order for the SEC to classify it as a security and regulate it accordingly. In order to prevent investors from simply throwing away money without comprehending the risks, or the problems that may occur, this classification is governed by a number of rules.
In Conclusion
In his pretty lengthy Twitter thread, attorney John E. Deaton clarified whether Ripple officials were careless enough to fail to recognize that XRP constituted security. The discussion began in reaction to a tweet from another lawyer, Sasha Hodder.
If the Ripple executives lose their legal battle with the SEC, Hodder revealed that Chris Larsen and Brad Garlinghouse will each be responsible for paying the SEC $450 Million and $150 Million respectively.
Deaton introduced a certain data offer making his assertions regarding the SEC case and stating that the SEC enforcement attorneys were permitted to possess and trade XRP until March 2019.
He continued by stating that in 2014, the USGAO (Government Accountability Office) defined XRP as a virtual currency used in the Ripple decentralized payment system. He also mentioned that XRP, along with BTC and some other tokens were mentioned in the FSOC Annual report for 2019 as virtual currencies that were increasing in market size.
Source: https://coinpedia.org/news/ripples-case-will-not-weaken-because-of-lbrys-loss-to-the-sec-claims-u-s-attorney/