Updated on January 26, 2023 11:42 AM
Both the U.S. Securities and Exchange Commission and Ripple Labs submitted applications for summary judgement, contending that the judge presiding over the case had access to sufficient data to render a decision without requiring a trial. The Ripple and SEC dispute will be settled with the filing of a "summary judgement."
Both Ripple and the SEC requested a summary judgment in separate motions submitted to the U.S. District Court Southern District of New York on September 17. Both the U.S. Securities and Exchange Commission (SEC) and Ripple Labs have asked a federal judge to rule swiftly on whether or not Ripple's XRP sales broke any rules governing U.S. securities.
When a side feels there is sufficient evidence at hand to provide a decision without going to trial, they can submit a summary judgment to the court. Judge Analisa Torres has been urged by all sides to rule swiftly on whether Ripple's XRP transactions were unlawful under US securities regulations.
The SEC has firmly kept to its convictions that XRP sales qualify as an "investment contract," regardless of Ripple's claims to the contrary. You are further informed that on September 17, Ripple CEO Brad Garlinghouse stated on Twitter that the filings showed the SEC "isn't interested in implementing the law." In his tweet, he also added: “They want to remake it all in an impermissible effort to expand their jurisdiction far beyond the authority granted to them by Congress.”
Brad Garlinghouse's tweet received a response from Ripple general counsel Stuart Alderoty, who wrote: “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.”
The general public and onlookers gave this tweet a lot of attention. Multiple times, it was retweeted, each time from a different perspective.
According to Ripple, the SEC's case "boils down to an impermissibly open-ended assertion of jurisdiction over any transfer of an asset," in its motion for summary judgment. The motion further contended that the SEC could not prove that holders of XRP tokens could not "reasonably expect gains" as a result of Ripple's efforts since no contractual obligations existed between Ripple and holders of XRP tokens.
The SEC's own petition for summary judgement, on the other hand, asserted that a "investment contract" might exist without a contract, any rights provided to the buyer, and without any duties to the issuer. In contrast, Ripple claimed in support of its motion that "that is not and should not be the law, because without these basic elements there is nothing to which the Howey test can reasonably be applied."
Instead, according to the Ripple motion, earnings were attributed to "market forces of supply and demand," something that the SEC "conceded." U.S. Attorney Jeremy Hogan underlined the importance of this admission in a post on Twitter on September 17 in which he said that "these concessions are great for a summary judgement."
The response from the XRP community to the filing of the Ripple and SEC motions was mostly favourable, with one Twitter user opining that "the end is near." The SEC filed a lawsuit against Ripple, former CEO Christian Larsen, and current CEO Brad Garlinghouse in December 2020 for allegedly generating $1.3 billion through unregistered securities sales using XRP. Now, nearly two years later, the companies have filed a petition for summary judgement.
Most importantly, you should be aware that if the court upholds the summary judgement, the decision will have a significant effect on identifying which cryptocurrencies qualify as securities under U.S. securities regulations.