In the ongoing legal case between the SEC and Ripple Labs, the commission declared XRP a security. However, there seem to be some twists and turns through the events unfolding on demand.
The US Securities and Exchange Commission is one of the prominent regulators in the crypto space. However, as the adoption and acceptance of crypto assets became more widespread, many counter activities began to emerge within the industry. In addition, growing negative impacts and numerous losses of investor funds increased the need for cryptocurrency regulation.
Different jurisdictions have different approaches to controlling and monitoring virtual assets. While some countries banned crypto assets, others exercised subtle control. Despite the strict methods of some guardians, their presence is helping to protect users.
The SEC pursues aggressive enforcement action against any asset and services firm that fails to comply with its rules. The attitude of the commission’s regulatory approach led to its lawsuit with Ripple XRP.
Reasons why the SEC classified XRP as a security
The Ripple community is getting a bit of a lull through the process flow of some motions filed for summary judgment. According to some experts, the SEC failed to authenticate the XRP token as a security.
Based on the motions filed, attorney James Filan interpreted the commission’s arguments in the case. He noted that the commission reports that it was not calling XRP safe. The lawyer stated that the commission intends to receive judgment on the case through the built-in secondary sales of the token.
According to the arguments, the SEC claims that buying XRP is an investment in a common company. This includes Ripple and its token holders. For the commission, the purchase remains an investment in the common enterprise through the vertical or horizontal common.
In its line of argument, the SEC implies that XRP may not be a security per se. But, their sales approach proves otherwise. This is because the token has no other possible selling position other than as security.
The Commission misses crucial points
Over the past few days, the suit’s Amicus Curiae, John Deaton, has pointed out crucial things the SEC is missing from the summary judgment. Deaton stated that the commission did not provide any price correlation of the XRP token. Furthermore, expert comments could not be relied upon for their motions.
According to Deaton, the commission has no comments that reflect Ripple’s influence in controlling the price of XRP. Furthermore, no witness can prove that XRP holders relied on or acted on Ripple Labs’ efforts.
We recall that the SEC filed the lawsuit against Ripple Labs, accusing the company of selling more than 1.3 billion dollars of Ripple. The commission claimed the sales were between 2013 and 2020. The drag in the case has been whether XRP is a security or a currency.
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