The US Securities and Exchange Commission (SEC) and Ripple Labs want a federal judge to either rule that the crypto company linked to the cryptocurrency XRP violated federal securities laws or otherwise dismiss the case without requiring a lengthy trial .
SEC and pulsations both filed motions for summary judgment in the Southern District of New York, asking District Judge Analisa Torres to rule on the arguments presented in accompanying documents. The documents were released to a federal court database on Friday.
SEC sues Ripple Labs, CEO Brad Garlinghouse and Chairman Chris Larsen in December 2020 (a day before former SEC Chairman Jay Clayton stepped down from the role) on allegations that he raised over $1.3 billion by selling XRP in unregistered transactions with securities. Ripple maintains that sales and trading of XRP it did not conform to the principles of the Howey test, a Supreme Court case that has acted as a way to determine whether something is a security for the past several decades.
The parties have filed various discovery motions over the past two years without really disputing the actual core issue – whether Ripple violated securities law by selling XRP. Motions for summary judgment mean that the parties are asking the court to actually decide whether the SEC or Ripple have provided enough to prove one way or the other whether there was a violation.
The SEC alleged, among other things, that various statements by Ripple executives indicated that Ripple was selling XRP and XRP investors were buying the cryptocurrency in the belief that their holdings would rise in value over time.
“Ripple has publicly advertised the various steps it is taking and will take to find ‘uses’ for XRP and to protect the integrity and liquidity of the XRP markets,” the SEC filing said.
For its part, one of Ripple’s arguments was that there is no contract between the company and XRP investors and that there is no joint venture, one of Howey’s demands.
Many XRP holders who buy through exchanges would not know who they are buying the tokens from, the company’s filing said.
“Even if the SEC were to engage in belated post-discovery transaction analysis to identify XRP bids and sales with contracts, her claim would still fail as a matter of law.” None of these contracts conferred post-sale rights on recipients to Ripple or imposed post-sale obligations on Ripple to act for the benefit of those recipients,” the filing said.