XRP issuer Ripple Labs filed its answers to Securities and Exchange Commission (SEC) charges of selling unlicensed securities.
Ripple Labs officially answered the charges laid against it by the SEC on Dec. 23. The company filed its rebuttal with the U.S. Southern District of New York federal court on Jan. 29.
The SEC claims that Ripple Labs and its current and former CEOs Brad Garlinghouse and Chris Larsen sold $1.2 billion in unregistered securities in the form of the XRP token. The SEC also claims that Garlinghouse and Larsen sold a further $600 million in unregistered securities.
Ripple’s filing is 93 pages long, and answers the SEC charges paragraph-by-paragraph. The company takes a multi-pronged approach centered on the way Ripple functions as well as its correlation with other cryptocurrencies in terms of pricing.
Moreover, the SEC charges go against the government’s own prior assessment. In 2015, the Financial Crimes Enforcement Network (FinCEN) recognized XRP as a digital currency and cleared the way for sales. The SEC knew of the ruling, the rebuttal claims, yet did nothing for years. This includes serving notice of a potential problem.
The rebuttal is a step before two upcoming events in the lawsuits. The next important date is Feb. 15, when a SDNY-originated offer to move the case to a magistrate expires. This offer is a step in most such suits, and the two parties need to agree on the move. Neither side is expected to recommend the change. After that deadline passes, a phone-in court hearing will take place on Feb. 22.
Against this background, talks between Ripple and the SEC are likely. SEC Commissioner Hester Pierce, also known as ‘Crypto Mom’, commented that the SEC often resolves such cases out of court.
No Sea Change Yet for XRP
The US Senate has confirmed several of President Joseph Biden’s cabinet picks already. This includes a Jan. 25 vote by the Senate for Janet Yellen as Treasury Secretary. In a change from the outright animosity shown by the previous secretary, Yellen is cautiously optimistic about digital currencies in general. However, she has not stated anything that can be construed as a movement in terms of the Ripple Labs case.
Federal Reserve Chairperson Jerome Powell, who will not have a direct say in the case, is expected to remain in his position for at least the next two years. He is taking a slow and deliberative approach to digital currencies, but from the perspective of a central bank digital currency (CBDC). Powell and Yellen, who was also Federal Reserve Board Chairperson, are said to have a good working relationship.