Ripple’s Brad Garlinghouse & Chris Larsen Demand SEC Provide Docs on Bitcoin and Ethereum
Legal representatives of embattled crypto-facing company Ripple Labs and its executives have changed their strategy. They are demanding that the courts pressure the US Securities and Exchange Commission (SEC) to present non-privileged documents in its case against the blockchain company.
Ripple Wants BTC And Ethereum Documents
In a March 15 filing sent to the Southern District Court of New York, Ripple Labs, CEO Brad Garlinghouse, and co-founder Chris Larsen are demanding that the SEC produce documents on Bitcoin and Ethereum; two similar crypto projects the SEC duly classified as non-securities (here and here) and therefore not subject to regulatory oversight.
The defendants believe since XRP is a digital asset, it should be accorded the same treatment as Bitcoin and Ethereum. To them, it's always been treated as one, as the Department of Justice (DoJ) and the Financial Crimes Enforcement Network (FinCEN) jointly agreed in 2015 that XRP was not different from Bitcoin BTC -0.55% Bitcoin / USD BTCUSD $ 16,550.11
-$91.03-0.55% Volume 18.09 b Change -$91.03 Open $16,550.11 Circulating 19.22 m Market Cap 318.06 b 10 mon SEC Commissioner says NFTs Might Fall Within Their Jurisdiction, Gensler Hires Senate Aid for Crypto Policy 10 mon A Possible Crypto Recovery Moving Into New Year, Risk-on Sentiments Send The Stock Market to Another Record High 10 mon Bitcoin and Ether Dump More Going Into Year-End, ETH Killers Showing Great Momentum and Ethereum. ETH -0.40% Ethereum / USD ETHUSD $ 1,217.27
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This classification saw XRP duly listed on over 200 virtual currency exchanges. Ripple Labs also noted that these independent crypto exchanges made separate inquiries to determine the status of XRP before listing it.
Furthermore, the financial regulator didn't inform Ripple Labs that XRP should be registered as a security before getting listed on multiple exchanges or that these crypto exchanges need to be registered as “securities exchanges.”
According to the filing made to Judge Sarah Netburn, the SEC has refused to comply with any of the requests made by the defendants. Ripple Labs notes that it served a discovery request to the SEC on Jan.26, 2021. Still, the regulatory agency has only responded with self-selected documents that do not shed light on the case, making it hard for them to prepare their defense.
They say the SEC has been mute for almost a decade and has not rendered any legal guidance in Ripple Labs' operation and its issuance of XRP until December 2020. To them, this can be misconstrued as a malicious attack on the third-largest cryptocurrency by market cap (at the time, now currently 7th).
The legal battle is getting drawn out, and Ripple Labs claims that the SEC is responsible for this. According to the digital payments firm, the SEC has intentionally withheld relevant and potentially exculpatory evidence in the ongoing class-action lawsuit against them.
The defendants said the SEC had been in active discussion during the relevant period about what conditions would merit a digital asset to be termed a security offering. Yet, it never deemed it fit to classify XRP until December 2020.
The SEC said the documents needed by the defendants are irrelevant to the case.
Hall Says Ripple Case Won't Be Easy
Ripple Labs and its executives are not the only ones seeking clarity and calling the SEC’s lawsuit an attack. Former SEC Commissioner and legal partner at white-glove legal firm Davis Polk & Wardwell Joseph Hall said the SEC might not achieve the results it wants on the Ripple case.
According to Hall, XRP sales of 2013 did not harm investors, nor did the company breach any known US financial services regulations. And with the regulator's inability to provide a burden of proof, we could see a big win for Ripple.
Hall further called on the regulatory agency to work on clear laws that would guide the emerging industry without harming innovation in the process.