On May 7, 2024, a significant development unfolded in the ongoing legal saga between Ripple Labs and the US Securities and Exchange Commission (SEC). According to a publicly shared document from defense attorney James Filan, the SEC submitted a redacted remedies reply brief, along with supporting exhibits against Ripple Labs, Bradley Garlinghouse (Ripple’s CEO), and Christian A. Larsen (Ripple’s co-founder).
In its latest filing, the SEC still argues that Ripple’s main activities involve selling XRP without registration. Many believe this could further affect US cryptocurrency regulations.
Is Ripple’s Upcoming Stablecoin in Jeopardy?
The SEC’s document claims Ripple’s main operation has been selling unregistered XRP since 2013. It also highlights Ripple’s plan to launch a new crypto asset.
“Ripple’s primary business continues to be […] unregistered sales of XRP. […] It also plans to issue a new unregistered crypto asset,” the SEC wrote.
Many think this asset is Ripple’s planned stablecoin. BeInCrypto reported in early April that Ripple announced its intention to launch a US dollar-pegged stablecoin.
Read more: Everything You Need To Know About Ripple vs SEC
Ripple stated US dollar deposits and short-term US government securities would back the stablecoin. Yet, the asset’s name and launch date are still unknown.
Stuart Alderoty, Ripple’s Chief Legal Officer, expressed his disdain for the SEC’s continued legal pressures. He criticized the SEC for failing to apply the law accurately and accused it of attempting to deceive the court. However, Alderoty remains optimistic about resolving the lawsuit and criticizes the SEC’s disregard for international regulatory frameworks.
“We trust the Court will approach the remedies phase fairly. And just when you think the SEC can’t sink any lower, if you are a financial regulator outside the US and have done the hard work of establishing comprehensive crypto licensing frameworks, know that the SEC has no respect for you and thinks you are handing out the equivalent of fishing licenses,” Alderoty stated.
This development comes as the SEC intensifies its scrutiny across the cryptocurrency industry. It has recently issued Wells notices to major crypto players, including Uniswap, Consensys, and Robinhood.
SEC Chairman Gary Gensler explained his strategy in a recent CNBC interview. He aims to bring the crypto sector under tighter regulation.
Gensler stressed the SEC’s role in overseeing a $110 trillion capital market. He highlighted the significant but problematic role of cryptocurrencies.
Meanwhile, Gensler gave no clear answer to the question of whether Ethereum (ETH) is a commodity or security. Instead, he pointed out the lack of necessary investor disclosures. Moreover, he criticized the practices of intermediaries in the centralized crypto markets.
“How do we ensure that the American investor is protected? And right now, they’re not getting the required or needed disclosures. And the intermediaries in the center of this rather centralized market generally are conflicted and doing things we would never allow the New York Stock Exchange to do. The New York Stock Exchange is not allowed to trade against the investors,” Gensler said.
Read more: What Does It Mean To Receive a Wells Notice From the SEC?
The SEC Chair’s comments highlight the crypto industry’s challenges. He sees the industry as prone to scams and fraud. The SEC aims to ensure full disclosures and legal compliance in all crypto transactions and offerings.
With the SEC’s assertiveness, the crypto industry awaits regulatory clarifications. These could reshape its operations and impact global market trends. This case tests the balance between crypto innovation and regulatory mandates to protect investors and maintain market integrity.
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