Today marks a turning point for the Ripple Labs Company and its counsel as a judge gave them permission to view the documents of the U.S Securities and Exchange Commission.
In the world of digital currency, XRP is known as one of the tokens that keep making progress and is a favourite for investors. The stability of this token is crucial to the markets. The CEO of Ripple Labs, Brad Garlinghouse has been in the news since the month of December when the SEC filed the lawsuits.
Major Updates
- In late 2020, US SEC filed a lawsuit against Ripple Labs for what it described as illegal actions.
- It was claimed that Ripple sold $1.3 billion worth of unregistered securities, amongst other charges.
- XRP is currently the third most valuable cryptocurrency and is valued at $23 billion.
The lawsuit filled against Ripple amounts to an argument of the validity of the XRP as a currency or a stock. In simple terms, according to the SEC, XRP is being categorized as shares of a specific stock and thus unregistered. Ripple Labs says XRP is affiliated with Bitcoin and Ethereum. If XRP is a currency like other tokens, then the SEC has no jurisdiction over it but if it is a stock, then it ought to be registered with SEC according to the laws of the United States.
The court’s ruling
Ripple Labs, today got a ruling by Judge Sarah Netburn in New York City that seems favourable. They got the rights and access to the U.S Securities and Exchange Commission documents. This gives the counsel for the company rights to view Crypto-assets as Securities.
The document categorically states that they can express their interpretation or views on crypto-assets.
The judge Magistrate granted the motion of the defendant largely, determining that SEC minutes are likely discoverable. The judge stated that the staff emails of the need not be produced. The SEC and the company can raise disputes with the court ruling.
Ripple Labs challenged the SEC’s lawsuit insisting that XRP is affiliated to Bitcoin and Ethereum – both products have been categorized and accepted by the SEC, so are not in violation of any law.
They also critiqued the choice of the SEC to wait eight years to make a complaint about the alleged illegal actions carried out by Ripple in 2013.
Ripple Labs Counsel
The counsel for Garlinghouse, Matthew Solomon believes that this is a positive development in the SEC lawsuit. They say that if any evidence is found that the SEC deemed XRP affiliated to BTC or Ether, it would be favourable for the Ripple Lab case.
Also of note is the fact that the SEC’s regulatory influence stops securities. The issue with the amount of time it took the SEC to file their complaint against Ripple can act as an advantage. Garlinghouse lawyers believe that they can undercut the SEC’s claims if they find evidence in the form of documentation that shows inconsistencies in the regulator's classification of XRP. The Counsel stated that the discovery would be a defence for the company.
Opposition Counsel
On the other hand, the counsel for the SEC has criticized the intention of the defendants to put the SEC on trial by dissection internal deliberations instead of the illegal actions carried out by their staff. The defendants believe that the focus should be on the actions of the company representatives.
While proceedings were going on in the court, the judge acknowledged the interest of the public and it is important to note that 500 people observed the case via a phone call. The judge warned one observer against reproducing the hearing via audio to the public as it is in violation of New York regulations.
Happening on the outside
Jeremy Hogan, an attorney, took to Twitter to share a 2016 cease-and-desist order directed at a one-time advisor to Ripple Labs for describing Ripple as a digital currency company. He insists that the SEC should explain how a company that is a digital currency company has abruptly become a digital security company.
In spite of the SEC's lawsuit and court proceedings, the price of XRP has been steadily rising and is up almost 100% since the beginning of April. Between yesterday and today, XRP is up by over 20% and trades at $1.09 currently.
