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Ripple Asks Court to Throw out SEC Case Following Commissioners’ Letter

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XRP

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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Last updated:

June 26, 2023

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The XRP-affiliated Ripple is looking to capitalize on a recent statement from members of the US Securities and Exchange Commission (SEC) calling for more transparency in cryptoasset classification – and now hopes to have its protracted war with the regulator dismissed.

As reported last week, two of the five SEC commissioners, Hester Peirce and Elad Roisman, hit out at the regulator’s settlement with the Coinschedule website operator Blotics.

Peirce and Roisman issued a joint, open statement, writing that they were “disappointed” that the settlement “did not explain which digital assets touted by Coinschedule were securities.”

They added that this was “an omission which is symptomatic of our reluctance to provide additional guidance about how to determine whether a token is being sold as part of a securities offering or which tokens are securities.”

The SEC has charged Ripple’s CEO Brad Garlinghouse and Executive Chairman and Co-founder Christian Larsen with selling XRP as an unregistered security. But Ripple’s legal team has reacted quickly, sending a letter to the judge in charge of the case, Analisa Torres. In the letter, the Ripple legal team claimed that there was now clear evidence supporting the idea that the case be dismissed.

Pointing out that the commissioners had highlighted a “decided lack of clarity for market participants,” the legal team added that the letter undermined the SEC’s central allegation in the case – that Garlinghouse and Larsen had willingly and knowingly sold XRP, knowing that it was a security.

The SEC, the defense counsel noted, had claimed it would “show that [Garlinghouse and Larsen] knew or recklessly disregarded that Ripple’s offerings and sales of XRP required registration as securities and that those transactions were improper.”

On Twitter, the Hogan & Hogan lawyer Jeremy Hogan called the two commissioners’ letter “a gift for Ripple.”

Meanwhile, Ripple’s bid to quiz the SEC’s former Division of Corporation Finance head, William Hinman – the official who made the landmark 2018 speech stating that bitcoin (BTC) and ethereum (ETH) were not securities, and thus not subject to SEC control – has taken a new turn.

Ripple won its battle to question Hinman earlier this month, despite the SEC’s protestations. And in a letter to Judge Sarah Netburn, the Ripple lawyers wrote they had reached an “understanding” with the SEC on the Hinman matter, and had agreed to postpone his testimony. The legal team claimed it had made “substantial progress in narrowing and resolving privilege issues.”

They added that there had been “a compromise by all parties,” which would allow Ripple’s lawyers to “examine” Hinman “on various issues without triggering a privilege objection from the SEC.”

At 07:59 UTC, XRP, ranked 7th by market capitalization, trades at USD 0.547 and is up by 2% in a day, trimming its weekly losses to less than 12%. XRP is the worst performing cryptoasset among the top 30 coins today.

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Learn more:
– SEC Asks Court to Let it See Evidence of Ripple’s ‘XRP Lobbying’
– SEC’s Head Wants to ‘Fill in the Gaps’ in Crypto Investor Protection

– Settlement Is Most Likely Outcome in Ripple vs. SEC Case – Attorney
– Fact-checking Ripple’s Claim that ‘Many G20 Gov’ts’ Call XRP a ‘Currency’