Ripple, the company behind the world’s fifth most valuable cryptocurrency, today introduced a detailed response that addressed allegations surrounding the SEC’s lawsuit filed against the firm in December.
The statement, which Ripple code-named ‘The Answer’, focused on refuting four claims made by Wall Street’s top cop on what the company calls “unproven allegations.”
The Ripple’s legal team assails the SEC’s $1.3 billion lawsuit, arguing that the agency is simply “Out of Step Domestically and Globally.” They further explained that before this case, no securities regulator in the world has deemed XRP as securities.
In the meantime, the Ripple team says that US regulators (the Department of Justice and FinCEN) determined in 2015 and 2020 that XRP is a virtual currency. And, although the Trump administration sought to overturn this ruling, which was originally made during the Obama era, their token has been regulated as a non-security.
Lack of clarity from the US regulators about XRP’s legal status looks to be the sticking point, the company notes. This compares to operating under clear rules in other jurisdictions like the UK, Japan, Switzerland and Singapore.
The SEC Is Picking Winners and Losers
Under the sub-title above, Ripple’s court filing states that there are no significant differences between XRP’s function and that of Bitcoin and Ethereum. But, while the SEC recognized the two most popular digital currencies as non-securities, the agency turned around and said the opposite was true for its own token.
Ripple has taken a step further and filed a Freedom of Information request with the SEC, asking the agency to explain why it said ETH was born a security, but eventually evolved into a non-security. Moreover, the company is demanding the regulator to release documents concerning the framework for this initial determination, as well as the SEC’s contacts with Ethereum founders.
Furthermore, Ripple claims that its token, XRP is more environmentally friendly compared to other cryptocurrencies whose mining process leaves a carbon footprint and consumes vast amounts of energy.
Finally, the company blasted the SEC’s lawsuit in general, saying that it was full of cherry-picked quotes, taken out of context, and affected innocent XRP retail holders with no connection to Ripple.
Ripple concluded ‘The Answer’ with a quote from Andrew Ceresney, who was the Head of SEC’s enforcement division, and now works at the law firm Debevoise & Plimpton LLP.
“The SEC’s case is unprecedented and ill-conceived. 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.”