On Jan. 29, Ripple replied to the lawsuit filed by SEC. The legal document dubbed as the “Answer” was shared publicly. The document was also shared in a recent blog by Ripple. As stated in the blog, it aims to set the record straight about SEC’s complaint about XRP as a security. Ripple claims that the SEC’s action is contrary to its mission to bring order to markets.
“XRP lost almost half of its market value, causing retail holders of XRP with no connection to Ripple– the very people the SEC purports to protect – to suffer billions of dollars in losses. What’s more, part of the SEC’s mission is to maintain orderly markets… and yet their overreach created havoc in the market.”
The document enumerates the reasons why XRP has no investment contract. It primarily stated that XRP is a virtual currency which means it is outside the SEC’s jurisdiction. In its response to the lawsuit, Ripple stated that the complaint filed by SEC is an “unprecedented and ill-conceived legal theory with neither a statutory mandate nor congressional authorization.”
Ripple criticized the SEC’s position in claiming that BTC and ETH are not securities. On June 14, 2018, William Hinman, director of the SEC’s division of corporation finance, during a conference in San Francisco said:
“Putting aside the fundraising that accompanied the creation of Ether, based on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions.”
Ripple sent a FOIA request to the SEC to seek more information on how the determination was made and to shed light on the issue.
“We’re just asking for the rules to be stated clearly and for those rules to be applied consistently across the board.”
In its response, Ripple reiterated that XRP is not a security. It stated that the DOJ and FinCEN’s decision five years ago that classifies XRP as a virtual currency.
“The SEC’s filing, based on an overreaching legal theory, amounts to picking virtual currency winners and losers as the SEC has exempted bitcoin and ether from similar regulation”.
Chris Giancarlo, former chairman of the Commodity Futures Trading Commission in an article published in the International Financial Law Review clearly stated that XRP is not a security.
XRP requires no mining hence it is more environment-friendly than BTC and ETH. Cryptocurrency mining anywhere in the world is highly dependent on energy sources such as coal which has a negative impact on the environment. In a report last year, BTC mining alone produces as much carbon dioxide as Kansas City.
Despite Ripple’s optimism on working with the newly appointed US SEC Chief Gary Gensler, seems like its legal battle against the agency will still continue.
“The SEC has ignored XRP’s clear status as a virtual currency, contradicting not only the findings of other U.S. regulatory agencies, but also international regulatory regimes. Over the last eight years, the XRP market, independent of Ripple’s activities, had grown to a massive scale- trading on over 200 exchanges worldwide. The SEC is now stretching the concept of an “investment contract” beyond its breaking point. We look forward to presenting our case in Court.”
On Saturday, the XRP price recorded a 86% increase after it became a focus of the r/Wallstreetbets cryptocurrency-focused off-shoot r/Satoshistreetbets. The same Reddit group that influenced the recent Doge bull run that resulted in a 570% increase in its spot price. The XRP price surge to $0.515 in a data by Crypto.co. As of writing, XRP is slightly down by 5.96% with its price at $0.486.