Ripple on the attack: did SEC staff own XRP?

The legal battle between Ripple and the SEC continues. Was the XRP sale an unauthorized securities transaction? Ripple intends to strongly disagree here. After some partial successes, the company strikes again.

Ripple demands insight into XRP reserves from employees:inside the US Securities and Exchange Commission (SEC). With this request, the company is supporting its own defense strategy in the lawsuit against the authority. The argument: In 2013, the Ripple team could not have legitimately known that XRP was to be classified as a security.

Attorney James K. Filan, who is monitoring the trial on Twitter, made the motion public on Aug. 27. In it, the Ripple lawyers demand “anonymized documents reflecting the SEC’s decisions to pre-approve trading in XRP, Bitcoin and Ether.” They also demand anonymized or aggregated data on any XRP ownership among SEC employees:

Defendants have a right to know whether the SEC allowed its own employees to sell, buy, and hold XRP as market participants during the very period the SEC now alleges the defendants violated the law and acted recklessly by selling XRP.

SEC internally not on hard crypto track until 2018

In the course of the motion, Ripple argues that the SEC did not place crypto investments by its employees:internally on reserve until January 19, 2018, because cryptocurrencies are potentially securities. This is according to documents seen so far. From this, it can be concluded that the Securities and Exchange Commission just did not fundamentally consider cryptocurrencies such as XRP to be securities before that. After all, trading in the latter has long been prohibited for SEC employees.

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Meanwhile, the SEC did not adopt a blanket, internal crypto trading ban in 2018 either. Instead, it was to be decided on a case-by-case basis. This is precisely why Ripple lawyers are asking for specific documents that reference XRP.

The request was preceded by four inconclusive meetings in July and August. The court agreed to release the documents. The SEC now has until September 3 to do so.

Ripple v. SEC: blow by blow.

The demand to see internal decisions on XRP trading is just one stop in the dispute over whether XRP is a token or a security. In this, the stakes are high for Ripple in the case, which has been ongoing since December 2020. If the court upholds the claim that Ripple has been illegally trading a security for seven years, it could face a fine of up to $1.3 billion.

For now, meanwhile, it looks like Ripple is on course for victory. In June, the court denied the SEC access to documents from a legal brief filed by the defendants. A few weeks later, on the other hand, it granted a Ripple motion. Former SEC official <a href=””>Wiliam Hinman may appear as a witness. Hinman claimed as recently as 2018 that Ethereum was not a security. His statement thus plays into the hands of the defense.