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- 1 Recently, the SEC submitted a filing that seeks the reinforcement of interlocutory appeal.
- 2 Stuart Alderoty, the CLO of Ripple, termed it a “hypocritical pivot”.
- 3 Many attorneys and judges have also criticized the SEC for this move.
Ripple and the SEC have been at loggerheads for quite some time now. Under the leadership of Gary Gensler, the regulator is going offensive on the crypto entities. Besides, Ripple, it has sued Binance and Coinbase too. The cases are ongoing and speculation is rife on them. However, a war of words keeps emerging from either party once in a while.
Decoding Ripple CLO’s Words
Recently, the SEC submitted a filing to reinforce its interlocutory appeal. Meaning that he wanted the court to pass an interim judgment before the final verdict. Stuart Alderoty, the CLO at Ripple and a well-known supporter of crypto didn’t take it lightly. He termed this request as a “hypocritical pivot” and highlighted Gensler’s high-handedness. Alderoty called the SEC chair out on manipulative actions.
The former pointed out that the latter is an urgent appeal while emphasizing that the crypto regulations are quite clear. Some other lawyers also commented on this while mocking Gensler’s stand. Attorney James K. Filan pointed out that the SEC was trying to pause the proceedings of the case earlier. He said that the regulator’s moves clearly show that they’re clueless about what they’re doing.
Renowned pro-XRP lawyer John E. Deaton said that Alderoty’s response to this filing is quite normal. He said that the Ripple CLO’s “hypocritical” word is quite fit to the SEC’s recent actions. Moreover, the federal judges have criticized the SEC’s demand terming them arbitrary and capricious. Judge Netburn interpreted “hypocrisy” as the SEC’s contradictory positions.
Ripple’s Executive Chairman, Chris Larsen, said that SEC’s approach to enforcing regulations will backfire one day. While the tussle between crypto firms and regulators intensifies, some big traditional players are getting eager to adopt crypto. Most crypto enthusiasts already know about BlackRock’s ETF filing. Recently, Visa also announced that it would use DAO stablecoin to process its remittances.
A Long-Standing Battle
The SEC filed a lawsuit against Ripple Labs in 2020. The regulator alleged that the crypto firm conducted an IPO of XRP which was an unregistered security. As per the litigation, Ripple offered unregistered security offerings in the form of XRP to investors. More than that, the platform offered billions of tokens in exchange for non-cash services.
The lawsuit roped in the current and previous CEOs. It alleged that the transaction volume of unregistered XRP was worth $600 Million. Furthermore, it accused the team of promoting the sales of tokens to accelerate the company’s operations. The lawsuit mentioned that the defendants failed to register the sales and its tokens. They totally violated the norms of federal securities laws, it said.
Base of All Allegations
The SEC argues that XRP is a security that usually has no inherent utility. By definition, it represents the ownership of the company. Ripple sold XRP as utility tokens, the ones that facilitate money transfers. So the regulator dragged the firm into court and the case is still going on. As per the Howey Test, anything is considered security when investors don’t have any influence over it.
SEC mandates the securities to be registered and its financial reports to be made public. XRP did pass the Howey Test but it’s still in the court. So only the future can tell the fate of the token in this case.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
