Ripple again outwits the SEC with a strategic gimmick that illustrates the farce of the process.
In the SEC’s ongoing lawsuit against Ripple, the defendants have filed a motion originally asked, to compel the U.S. Securities and Exchange Commission to provide documentation of its “preliminary trading decisions” for XRP, Bitcoin and Ether. As well as documents about the XRP holdings of SEC employees.
“The defendants request the submission of anonymized documents reflecting the trading preliminary clarification decisions relating to XRP, Bitcoin and Ether, or alternatively the submission of this information in aggregate form.”
The letter confirms that the defendants had already requested this information on four other occasions-but “to no avail”.
Why does Ripple want this information?
According to the defendant’s legal representation, Ripple wants to understand the SEC’s trading guidelines regarding trading “digital assets” and whether the regulator has allowed its employees to trade Ripple’s XRP.
In June 2021, the court granted Ripple’s request to force the SEC to produce these documents. The regulator presented a policy dated January 2018 entitled “Ethics Guidance Regarding Digital Assets”.
From this it follows: the SEC did not prohibit its employees from trading cryptocurrencies until January 2018. This, Ripple said, is consistent with the SEC’s view that digital assets are generally not considered securities.
In December 2020, the start of the lawsuit, the SEC had alleged that Ripple had illegally sold $ 1.3 billion worth of unregistered securities since 2013.
However, Ripple argues that the SEC’s digital assets policy undermines the entire premise of the lawsuit. Prior to January 2018, the SEC did not prohibit employees from trading XRP. It follows that the authority need not have had a conclusive opinion that XRP is indeed a security.
Accusing Ripple of securities fraud, which dates back to 2013, is therefore at best incompatible with personnel policy. And at worst, a poorly thought-out attempt to attack the crypto industry via Ripple.
The SEC is surprised
As with previous crypto-based securities lawsuits, such as the Telegram case, which effectively ended the introduction of the TON token, the SEC probably thought the Ripple lawsuit had already been won.
But the longer the case goes on, the stronger the defense becomes. In her recent comments on the lawsuit, Roslyn Layton explains: The SEC has underestimated the turmoil it is now facing due to the Ripple lawsuit.
Having summed up the situation so far, she concluded with a massive loss of credibility for the authority and its recently appointed chairman Gary Gensler.
“As the investigation phase draws to a close and the public backlash intensifies, one wonders why SEC Chairman Gary Gensler continues to risk his legacy to take the Ripple case to court.”
Layton ends with the rhetorical question of whether the SEC and Gensler can afford to continue pouncing on the crypto industry and its backers.
Text credit: Cryptoslate
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