Ripple doesn’t stand a chance against the SEC in its ongoing court battle
According to U.S. Representative Brad Sherman, Ripple doesn’t stand a chance against the Securities and Exchange Commission (SEC) in its ongoing court battle.
Ripple Will Lose Court Battle Against SEC
U.S. Representative Brad Sherman stated in a recent FOX Business interview that he believes the SEC would prevail in its legal fight against Ripple because XRP, the native cryptocurrency on the Ripple network, is a security.
In December 2020, the SEC filed a high-profile lawsuit against Ripple, alleging that XRP is unregistered security. The SEC accused the company and two executives of collecting at least $1,3 billion through the sale of XRP. The court has not yet evaluated the token’s regulatory classification, as the matter is not scheduled to be decided until the following year.
XRP is a digital asset that operates on the XRP Ledger, a blockchain developed by Jed McCaleb, David Schwartz, and Arthur Britto. McCaleb and Britto would eventually form Ripple and use XRP to conduct network transactions.
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Sherman is recognized for being a ferocious adversary of cryptocurrencies. In 2018, he pushed for a complete ban on cryptocurrencies. He recently asked the SEC to restrict XRP trading on US-based cryptocurrency exchanges. The congressman even swiped the commission, claiming it failed to pursue cryptocurrency exchanges that backed the token’s trade.
Only the Court can make a determination (it’s called due process). This is the pernicious effect of the SEC’s reg by enforcement approach – harming people, markets and American innovation – with unproven allegations masquerading as regulation.
— Stuart Alderoty (@s_alderoty) July 19, 2022
Ripple’s general counsel, Stuart Alderoty, disputed with the Democratic representative for California’s 30th congressional district that the mere filing of the case does not reveal whether or not the token is a security. For his part, attorney Jeremy Hogan was astounded by Sherman’s conclusion that XRP is a security, given the court’s ruling that the plaintiff and the defendant cannot communicate evidence with third parties.
de-listing $XRP because they all concluded it was a security too.
When I addressed the fact that the exchanges faced a lack of clear guidance from the SEC he said “Everybody knew they were skating on thin ice. They decided to skate on thin ice to make money.”
— Eleanor Terrett (@EleanorTerrett) July 20, 2022
FOX Business reporter Eleanor Terrett responded to Hogan’s tweet by stating that the congressman is certain that XRP is security due to “the grounds articulated in the SEC’s view.” “If XRP is a security… why are these crypto exchanges not in violation of the law?” Sherman questioned SEC division director Gurbir Grewal.
In his defense of the SEC, Grewal responded by saying the commission had pursued the Delaware-based exchange Poloniex in 2021. Sherman responded, “It’s easier to pursue small fish than large ones.”
Popular crypto legal counsel John Deaton weighed in on the topic, noting that the US regulator has “stated that it doesn’t make security determinations — only the Federal District Court can.”
Brad Garlinghouse, CEO of Ripple, also commented on Sherman’s statement. He said that the congressman’s remarks demonstrate that he is attempting to pursue a political agenda.
The SEC vs. Ripple case is a hard one to call. Both parties appear to have some procedural success, at least in their own eyes. For the time being, it’s a stalemate.
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