Did Ripple and its two executives, Chris Larsen and Brad Garlinghouse, know that XRP was a security when they sold billions of dollars in tokens? It looks like we will finally know the answer to this question for sure in a week.
The US Securities and Exchange Commission has been in a long and complicated legal battle with Ripple since December 2020. The regulator accuses the San Francisco company and its two key executives of knowingly selling unregistered securities. Ripple, on the other hand, is responding to these accusations by claiming that the SEC has never issued guidelines to show that XRP is a security.
But now the focus of the discussion has changed. Right now, eyes are on whether third-party law firms Ripple consulted years ago told the company that XRP is a security, rather than focusing on the SEC’s failure to provide guidance.
Last week, United States Judge Analisa Torres of the Southern District Court of New York ruled that Ripple should release documents revealing the legal advice it received regarding the legality of XRP tokens.
Why is February 17 an “okay or continue” date?
In 2012, when Ripple launched, Chris Larsen (who was the CEO at the time) asked a law firm for advice on the status of XRP. This law firm, whose name has not been disclosed all this time, sent two notes to Ripple in which it analyzed all legal issues that could arise from the new token. Everything was made public.
What was at issue was the content of the notes. According to the SEC, Ripple was advised that XRP is a security, but regardless, the company chose to continue with its plans regarding the token.
Chris and Ripple dispute this claim and argue that, based on their ratings, any reasonable person would conclude that XRP is not a security under federal law.
However, Ripple and its executives do not want them to be unsealed and made public, although they claim that the notes exonerate them. In fact, they’ve struggled hard to keep those in these notes away from the SEC and the general public. In a filing for it, the duo claimed that what was included in the notes was competitively sensitive and also had no significant impact on the case.
Judge Torres disagreed with Ripple, arguing that “if the notes prove your innocence and you continue to refer to them in court, then they should be relevant to the case” (summarizing).
Until February 17, we will be able to decide for ourselves who is lying between the SEC and Ripple. The regulator is quite determined to access these notes as they will prove that Ripple knew of committing a crime but continued their business no matter what. The notes are also thought to weaken Ripple’s legal notification defense.
“We are not afraid of grades,” Ripple says as XRP rises
Could the notes hurt Ripple’s defense? If so, then the blockchain payments company has done a great job hiding it until now.
Stuart Alderoty, Ripple’s general counsel, said in a statement following Judge Torres’ final decision that the company looks forward to the release of the notes as they will show “in 2012 Ripple received a legal analysis that XRP is not an investment contract.”
The lawyer said that before the SEC filed a lawsuit against the cryptocurrency, he knew XRP had been trading globally for eight years but did nothing, which is a rather surprising development, adding:
“As we continue to vigorously defend this case, we look forward to the public’s access to these documents.”
The SEC isn’t backing down either. He notes that after the judge’s decision, it’s critical that the public see the notes so they can prove to the public that the organizer wasn’t lying about their charges, even if the case doesn’t reach any other conclusions.
The case is expected to take on a very different dynamic once the notes are made public. If Ripple isn’t lying, the lack of fair reporting defense will be strengthened, which could lead to the collapse of the case for the SEC. Although both sides remain optimistic that the outcome will be positive for them, on February 17, someone will lose, badly…
XRP has seen a significant increase in value in recent days as both sides continue to fight. Last week, the cryptocurrency, which started the week at $0.61, gained an incredible 44 percent. The cryptocurrency, which was the biggest gainer among the top 50 cryptos at the beginning of the week, is trading at $ 0,8555 with an increase of about 9 percent at the time of writing.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.