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Ripple CEO Says Binance Has Documents Relevant to SEC Lawsuit

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Ripple’s lawsuit with the Securities and Exchange Commission (SEC) is now bringing mega crypto exchange Binance into the mix.

Ripple CEO Brad Garlinghouse says Binance holds relevant documents to the court case.

In a new filing with the Southern District of New York on behalf of the CEO, Garlinghouse’s legal team requests documents from Binance that contain information regarding the process by which Garlinghouse conducted transactions on foreign exchanges with the 6th-ranked cryptocurrency XRP. 

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“Mr. Garlinghouse seeks foreign discovery on the basis of his good faith belief that [Binance Holdings Limited] possesses unique documents and information concerning this case, and specifically, concerning the process by which transactions in XRP allegedly conducted by Mr. Garlinghouse on foreign digital asset trading platforms were conducted.”

Alleged by the SEC’s amended complaint (AC), Garlinghouse sold more than 357 million XRP ($257,348,709) to “public investors on the market,” and that funds were sold on “worldwide” digital asset trading platforms to investors “all over the world.”

“The SEC seeks disgorgement based on the sales made by Mr. Garlinghouse, including those sales made on digital asset trading platforms located outside of the United States.”

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Garlinghouse’s legal team challenged this remark in the AC, specifying that the SEC’s accusation actually only applies to domestic sales and offers of securities, citing section 5 of the Securities Act of 1933.

“In the case of transactions conducted on such foreign trading platforms, both the offers of XRP and the sales of XRP occurred on the books and records of the respective platforms, and therefore geographically outside the United States. The SEC’s failure to allege domestic offers and sales should be fatal to its claims for the reasons set out in Mr. Garlinghouse’s Motion to Dismiss.

… the discovery that Mr. Garlinghouse seeks will be relevant to demonstrating that the offers and sales that the SEC challenges did not occur in this country and are not subject to the law that the SEC has invoked in this case. The entity identified in this Motion is a digital asset trading platform located outside the United States which Mr. Garlinghouse used to transact in XRP. The evidence to be obtained from this digital asset trading platform is probative of the issue of whether “irrevocable liability” was incurred outside of the United States with respect to these transactions.”

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Garlinghouse’s response comes as part of the ongoing SEC lawsuit filed against Ripple in December of 2020, which initially alleged that Brad Garlinghouse and Ripple co-founder Chris Larsen sold XRP tokens as unregistered securities. 

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Court Orders SEC to Answer Ripple’s Interrogatories

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Ripple, however, has failed to bury the SEC in paperwork, with the judge granting the agency’s motion for a protection order against “unduly burdensome” requests

Magistrate Judge Sarah Netburn has ordered the U.S. Securities and Exchange Commission to answer some of Ripple’s hotly-contested interrogatories, which are meant to determine whether or not the plaintiff’s contentions can be supported by facts. 

The agency will have to specify why the company’s XRP sales are investment contracts:

The SEC’s legal theory is not an excuse to avoid responding to Defendants’ factual inquiry. Nor is it a basis to answer a different question than posed.

In addition, the SEC will have to state whether it believes that Ripple’s efforts were key to boosting the price of XRP.

However, Ripple’s interrogatory about whether or not the XRP Ledger was fully functional prior to the start of the securities offering has been denied for being too vague:

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The Court agrees that this interrogatory seeks relevant information. But Defendants’ interrogatory is too vague for the reasons identified by the SEC.

Netburn has also granted the SEC’s motion for a protective order, which allows the regulator not to respond to all of Ripple’s “unreasonably burdensome” interrogatories.

The agency claimed that covering all the 29,947 requests would take 104 days without “breaks or sleep.”

Earlier this week, the court also granted the SEC’s motion to extend the expert discovery deadline to Jan. 14, 2022, despite Ripple’s protestations.

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Ripple CEO Says the SEC Helped Ethereum to Surpass XRP as No.2 Crypto

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  • Ripple CEO aired his opinion on the crypto market and regulations.
  • Brad Garlinghouse said the US SEC granted Ethereum regulatory green light.

At the DC Fintech Week virtual conference on October 21, Ripple CEO Brad Garlinghounse aired his thoughts on the state of the crypto market and regulations. Besides, he holds a grudge over the financial regulator’s approach to Ethereum.

In addition, Garlinghouse declared that the US Security and Exchange Commission (SEC) granted Ethereum regulatory green light that enabled it to surpass his firm’s XRP token.

Likewise, the Ripple boss feels that his firm has been played out. But, at the same time, Ethereum’s subsequent success is at least in part down to more favorable treatment by the US SEC. Also, Garlinghouse stated that it is affecting its market. He said,

“Within the last few years, XRP was the second most valuable digital asset. As it became clear the SEC had given a hall pass to ETH, ETH obviously has exploded, and that clarity has helped.”

To clarify, XRP was the second-largest crypto asset by market cap in late December 2017. But, currently, it has dropped to seventh place while Ethereum has kept the second spot ever since.

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Furthermore, the reason why XRP dropped is the US SEC pursuing Ripple over claims that XRP is unregistered security. In fact, in January, Ripple filed a Freedom of Information Act request with the US SEC demanding to know why it didn’t consider ETH security.

As a result, later in July, a district judge allowed the firm to depose a former official who declared in 2018 that ETH was not a security.

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Ripple CEO reinstates SEC bias towards ETH, claiming XRP could’ve been No.2

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It is not news that the ongoing XRP lawsuit has got the better of Ripple’s XRP token. Ripple CEO, Brad Garlinghouse recently questioned the SEC’s bias towards Ethereum, claiming that XRP would’ve been at the No. 2 position instead of ETH if it weren’t for the commission’s partial crackdown. Garlinghouse spoke at the DC Fintech Week virtual conference yesterday, arguing that the U.S. Securities and Exchange Commission alleged Ripple’s XRP as unregistered security while granting Ethereum a regulatory free pass, which in turn helped ETH shoot through the roof.

“Within the last few years, XRP was the second most valuable digital asset. As it became clear the SEC had given a hall pass to ETH, ETH obviously has kind of exploded and that clarity has helped.”

XRP secured the position of the second-largest crypto asset by market capitalization during the latter half of 2017. However, the token has dropped down to seventh place while Ethereum stands strong as No. 2. Furthermore, Garlinghouse claims that the SEC’s exclusively aggressive anti-crypto stance to allegedly protect the consumers is in fact anti-investors. Referring to the XRP lawsuit, Ripple CEO emphasizes that “nearly 50,000 U.S. people who hold XRP who are trying to sue the SEC for ‘protecting them’”.

XRP Holders left with bearish and frozen funds

Earlier this week, Attorney Deaton Filed a Letter Motion on behalf of the XRP Holders (Movants) that contended SEC’s extension request, with the main argument concerning the XRP holders’ frozen funds because of the consistent postponement of the lawsuit’s final verdict. During the ongoing bull run, XRP remains considerably bear because of the regulatory crackdown on Ripple. However, the court has overlooked the community’s concern and granted the extension explaining that in lieu of pending motions, extra time will only facilitate both parties to complete pending fact discovery and thoroughly prepare for upcoming expert depositions.

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“The lack of liquidity within the United States, coupled with the mass de-listings prevents XRP Holders from trading, selling, transferring, or converting their XRP. It is because of this de facto in place seizure of their property that XRP Holders took the extraordinary step to seek intervention as defendants… Any delay in the underlying action marks yet another day XRP Holders do not have access to their funds.”, wrote Deaton.

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