SEC and Ripple Seek Summary Judgment in XRP Status Case

SEC and Ripple Labs filed motions for summary judgment in the case alleging potential securities-law violations. The plaintiff and the defendant said the judge has enough information for this.

The firm’s lawyers said that the Commission has run out of arguments in trying to prove that XRP sales constituted an ‘investment contract’. The SEC noted that this has been proven.

«The Commission has no interest in applying the law. In an impermissible attempt they want to expand their jurisdiction far beyond the powers granted to them by Congress,» said Brad Garlinghouse, CEO of Ripple.

Today’s filings make it clear the SEC isn’t interested in applying the law. They want to remake it all in an impermissible effort to expand their jurisdiction far beyond the authority granted to them by Congress. https://t.co/ooPPle3QjI

— Brad Garlinghouse (@bgarlinghouse) September 17, 2022

Ripple’s chief legal officer, Stuart Alderoty, noted that after two years of litigation the SEC has failed to prove XRP’s compliance with any prong of the Howey test.

My hot take — after two years of litigation, the SEC is unable to identify any contract for investment (that’s what the statute requires); and cannot satisfy a single prong of the Supreme Court’s Howey test. Everything else is just noise.

— Stuart Alderoty (@s_alderoty) September 17, 2022

In particular, the motion argues that the SEC cannot establish that XRP holders ‘expected profits’ based on Ripple’s efforts. There were no contractual obligations between the startup and token holders, the lawyers added.

SEC staff in their court filing argued that an ‘investment contract’ can exist without a contract, any rights conferred on the purchaser, or obligations to the issuer.

Ripple contends that without these ‘essential elements’ there is no basis for applying the Howey test. The lawyers also stressed that the Commission ‘admitted’ the startup’s claim that profits depend on ‘the forces of demand and supply’.

Hogan & Hogan partner Jeremy Hogan noted that ‘these concessions are perfect for a summary judgment’.

Video TOMORROW!

I just read the briefs and the SEC has got a couple big problems:

1. Its expert agrees that most of the changes in XRP price are due to market forces (and not Ripple). Ouch.

These types of concessions are perfect for summary judgment. 1/2 https://t.co/Hvs2p2j8D5 pic.twitter.com/lt9u1BX4pI

— Jeremy Hogan (@attorneyjeremy1) September 18, 2022

On September 18, amid headlines about the case, XRP’s price neared $0.40, a level last seen on July 30. The next day the asset moved with the market. At the time of writing, the daily decline is is 10.1%, which broadly tracks the dynamics of other crypto assets.

Earlier in August, the SEC declined to disclose internal documents in the Ripple case.

Earlier Fox Business published a comprehensive investigation into the court proceedings. Journalists concluded that the officials behind the filing could have ties to Ethereum.

Prior to this, SEC representatives could not confirm or dispute the authenticity of a video of William Hinman’s remarks at Fintech Week 2018, in which he stated that Ethereum transactions are not securities transactions.

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