- Securities and Exchange Commission (SEC) sued Ripple’s top-brass over alleged unlawful sales of its native cryptocurrency XRP last December
- Lawsuit focuses on its failure to register native cryptocurrency XRP as a security
- Ripple denies charges, says incriminating documents are covered under attorney-client privilege.
Ripple, the third largest crypto firm, is facing flak for its alleged failure to adhere to securities laws. The US securities watchdog, SEC, had sued the company’s CEO Brad Garlinghouse and co-founder Chris Larsen last December. Even as the defendants lawyer up, the SEC made a change in its complaint. They added facts regarding the alleged role played by the CEO and co-founder in raising investments through unlawful means.
Decisive crypto trial
In what could be history in the making, this case is of huge significance for the entire crypto industry. This is because it could directly affect the circulation of 39 billion XRP tokens. It all started last December, when the SEC held the company responsible for not registering XRP as a security. As a result, the lawsuit claims that the company raised over $1.3 billion. This in turn improved sales and raised investments for the company. This, as the SEC alleged, broke the so-called “investment contract”, while also violating the Contracts Act.
Ripple rejects claims
The crypto firm formally rejected all allegations and decided to proceed to trial. They ruled out any possibility of a settlement offer. The firm’s counsel, Stuart Alderoty, lamented via Twitter about the SEC amending the complaint and that it took a considerable amount of time to bring it up in the first place. Ripple, in a formal reply to this development, stated that XRP being a virtual cryptocurrency, falls outside of the domain of the SEC. By filing this lawsuit, it has overlooked international regulations regarding cryptocurrencies.
Judicial trial demanded
Completely rejecting talks of settlement, Ripple decided to proceed forward with the trial. Several judicial experts note that it is quite uncanny for the SEC to single out a company’s top-brass as defendants in a lawsuit. The number of depositions has also been extended to 15 instead of the usual 10. The complainant’s strategy would be to parry motions to dismiss while demanding access to incriminating documents, which is currently protected by attorney-client privilege. Whatever be the case, the company’s lawyers seemed eager to see the case move forward in court.