Payments company Ripple filed its response on Friday to the billion-dollar lawsuit it faces from the United States Securities and Exchange Commission. And it is asking the court to examine the regulator’s position on Bitcoin and Ethereum as part of its appeal.
The SEC filed lawsuits against Ripple, the company behind XRP, at the end of last year. The Commission claims that the company illegally raised $ 1.3 billion through the unregistered sale of XRP. The Commission also accused co-founder Chris Larsen and current CEO Brad Garlinghouse.
Today, in a 93-page response filed in a Manhattan court, Ripple meticulously countered each of the Commission’s allegations, setting out what its defense will be if the case proceeds to trial.
As part of his defense, Ripple claims that the SEC has failed to establish its claim and that, primarily, XRP is not a bond or an “investment contract” under United States federal law.
Notably, Ripple also alleges “lack of due process and fair warning” in his defense. He argues that the SEC could and should have filed these allegations in 2015, when Ripple settled a lawsuit with FinCEN. The agreement, according to the company, describes the XRP as a “virtual convertible currency”.
In that sense, Ripple says that XRP should be considered a virtual currency in the same way that the SEC apparently sees Bitcoin and Ethereum, citing statements made by former SEC chief financial officer William Hinman in June 2018.
Hinman’s now infamous “sufficiently decentralized” statements indicated that he, and presumably the SEC as a whole, currently did not see Bitcoin and Ethereum as bonds. This is despite the fact that Ethereum was launched through what would now be considered an ICO and, therefore, an illegal securities offering by SEC standard.
Hinman “told virtual currency buyers that the agency did not consider virtual bitcoin or ether currencies as bonds and would ‘put aside the fundraising that accompanied (Ethereum)’ s creation and look at the ‘current state of (Ethereum) ) ”, Said Ripple in his defense.