The Price Of Ripple (XRP) Will Depend On The Outcome Of The Trial With The SEC


✍️ 19 September, 2022 - 18:11 👤 Editor: Jakub Motyka

  • The case of Ripple (XRP) and the SEC is about to come to an end.
  • Rippl claims that the SEC cannot prove that XRP is an investment contract.
  • Ripple's victory could mean an important precedent for future cases against cryptocurrencies accused of being securities.

The case of Ripple Labs (XRP) and the Securities and Exchange Commission (SEC) of United States is about to come to an end. The emblematic case that has captured the attention of the world of cryptocurrencies for almost 2 years, has reached its peak and the defense is preparing to tie up the loose ends.

The defense attorney for Ripple Labs, the company behind XRP, has filed a motion for summary judgment. In this way, the defense could show that there are no real reasons for a dispute and, therefore, close the case.

What Is The SEC Lawsuit Against XRP About?

Recall that in December 2020, the Securities and Exchange Commission sued the then director of Ripple Labs, Christian Larsen, for raising USD 1.3 billion. This, due to the alleged sale of unregistered securities, however, the SEC has not been able to substantiate its accusations. Ripple's defense is currently preparing to put an end to the case.

What Is Ripple's Defense Argument?

Ripple states that the SEC cannot prove that the transfer of XRP involves an investment contract. This is an entirely necessary component to qualify a digital asset as a security, using the so-called Howey Test. As there is no "investment contract", there are no post-sale obligation commitments by the investment promoters.

In this way, Ripple's defense ensures that an investment contract cannot exist, unless the investor acquires a contractual right to demand and receive part of the profits generated by the promoter. Because the SEC has not been able to prove the existence of said contract for the sale of XRP, there are conditions to request a motion for summary judgment. This has effectively meant that the lawsuit does not have a specific basis that would allow a formal accusation to be made.

In case Ripple (XRP) loses, the SEC case would become a powerful precedent for all lawsuits similar to cryptocurrencies. In this way, it could be determined which cryptocurrencies are securities and come within the jurisdiction of the SEC, and which do not.

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Angélica Añez
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