“Ripple claims that XRP does not meet the criteria for traditional security regulations and denies that the original sale of the token does not constitute the version of an” offer from the SEC.
Ripple has issued an official response to allegations by the US Securities and Exchange Commission (SEC) about the illegal sale of XRP.
In court documents filed in the southern district of New York, the word “denied” appears 440 times as Ripple refutes the SEC’s claim that the company made an illegal security offering when they first XRP to investors. issued.
“Ripple denies being involved in any offer of securities; denies the inaccurate characterization of the legal advice Ripple received regarding XRP; and denies that he made a single ‘presentation’ of XRP. ”
“Ripple claims that XRP does not meet the criteria for traditional security regulations and denies that the original sale of the token does not constitute the version of an” offer from the SEC.
‘Before this case, no securities regulator in the world claimed that transactions in XRP should be registered as securities, and for good reason. The functionality and liquidity of XRP is completely incompatible with security regulation. To require the registration of XRP as a security is to harm its main utility … To treat XRP as a security … thousands of exchanges, market makers and other players would be subject to the giant virtual currency market to long, complicated and expensive regulatory requirements that were never intended to govern virtual currencies. ‘
Ripple told the court the firm has never attempted to raise money on the promise of profits, which is the premise that authorizes the SEC to oversee the cryptocurrency ecosystem.
‘As a matter of economic importance, XRP categorically differs from the various instruments and business arrangements that Congress has authorized the SEC to regulate – which, unlike Ripple,’ contain schemes devised by those who use others’ money. on the promise of profits. ”Howey, 328 US at 299.
“Every other case in which courts have ruled that transactions with a digital asset were investment contracts has the ICO of an issuer or other promises of future tokens to raise money to develop a product with digital assets, as well as a contractual relationship between the issuer and the asset. buyers. Ripple has never had an ICO, has never offered future tokens to raise money and has no contracts with the vast majority of XRP holders, ‘Ripple told the court.
SEC accuses Ripple of $ 1.3 billion unregistered security offering
In December 2020, the SEC filed an action against Ripple Labs Inc. and two of its executives for raising more than $ 1.3 billion through an unregistered supply of digital assets.
The lawsuit accuses co-founder Christian Larsen and CEO Brad Garlinghouse of raising funds in an unregistered security offering to investors in the U.S. and worldwide since 2013.
Stephanie Avakian, director of the SEC’s enforcement department, said at the time: ‘Issuers who want the benefits of a public offering, including access to retail investors, wide distribution and a secondary trading market, must comply with the federal security laws that require registration of offers unless an exemption from registration applies.
“We allege that Ripple, Larsen and Garlinghouse did not record their current offer and sale of billions of XRP to retail investors, depriving potential buyers of adequate disclosure about XRP and Ripple’s business and other important long-term protections that are fundamental to our robust public market system. ”
“Play the rules, otherwise we’ll shut you down”
New York Attorney General Letitia James recently warned industry members that the state of New York will not tolerate unregistered cryptocurrency operations. They could potentially face “both civil and criminal liability”.
Attorney General Letitia James said: ‘Too often greedy players in the industry risk unnecessary risks with investors’ money, but today we compare the playing field and give warnings to investors as well as industry members across the country. All investors should be extremely careful when investing in virtual currencies. Cryptocurrencies are high-risk volatile investments that can lead to devastating losses just as quickly as they can profit ”.
“We will not hesitate to take action against anyone who breaks the law. Two weeks ago, we filed a lawsuit to stop Coinseed’s fraudulent operation. Last week, we ended the illegal activities of Bitfinex and Tether in New York. And now, today, we are sending a clear message to the entire industry that you are playing by the rules, otherwise we will shut you down. ‘
The attorney general recently banned Bitfinex and Tether from working in New York. The ruling follows a thorough investigation of 2.5 million documents that concluded that Tether falsely suggested that each of his stable portfolios was in the reserve at all times, one-on-one, by U.S. dollars.
New York AG is also banning the crypto-trading platform Coinseed from operating in the state after operating as an unregistered broker-dealer for more than three years while raising more than $ 1 million in investors’ assets.
“Millions across the country and the world today use cryptocurrencies as decentralized digital currencies – as opposed to real, regulated government currencies, including the US dollar – to buy goods and services, often anonymously, through secure online transactions,” NY AG James said at the time. . .
Ripple: from cryptocurrencies to ‘real, regulated government currencies’
Ironically, Ripple’s XRP is now considered by many countries as the ledger for its centrally supported digital currencies (CBDCs). Ripple has announced that it is launching a private version of the XRP Ledger.
CPA Australia has released a report on CBDC stating that the French central bank, Banque de France, has openly discussed Ripple / XRP as a possible platform for Europe’s central digital currency.
More than 80% of central banks are actively studying the development of their own digital currencies, and Ripple claims that the CBDC ledger is private (for transaction privacy and currency control) and interoperable (to connect with current global financials). financial infrastructure, as well as other CBDCs and other digital currencies), as well as adaptable.