Authored by Rahul Tora via The Epoch Times,
It’s been nearly 20 months since the Securities and Exchange Commission (SEC) sued Ripple Labs for selling XRP as unregistered securities. John Deaton, who represents Ripple in the SEC vs. Ripple Labs court case battle, believes there’s major evidence of overreach by the SEC.
In December 2020, the Ripple case was launched by Jay Clayton, then-chairman of the SEC, which is now being led by Gary Gensler. Gary Gensler recently wrote on Twitter that “there’s no reason to treat the crypto market differently from the rest of the capital markets just because it uses a different technology.” John Deaton responded to the tweet by claiming Gensler is expanding the “Howey Test” beyond recognition, in reference to the U.S. Supreme Court case that determines whether a transaction qualifies as an “investment contract.”
Classifying XRP as an investment contract would therefore deem XRP a security, which would result in disclosures, registration requirements, and an overall much stricter regulatory scrutiny process for Ripple.
The lawsuit charges Ripple and two executives for selling $1.3 billion worth of securities. The accusation alleges that in the beginning of 2013, CEO Brad Garlinghouse and co-founder Christian Larsen raised capital to finance the company’s finances and exchanged XRP for non-cash considerations.
In short, the SEC alleges that Ripple was treating XRP like a stock instead of a currency; therefore, the SEC claims it has jurisdiction.
Ripple Labs aims to assist financial institutions and payment providers to move money quickly and at low cost, which would entail replacing the current SWIFT system if widespread adoption was initiated. The Society for Worldwide Interbank Financial Telecommunications (SWIFT) banking method is...