The lawsuit between the SEC and the crypto-issuing company, Ripple, has been ongoing for two years already. The defendant argues that the regulator has no evidence against it and is asking for a quick decision in its favour.
The SEC failed to prove Ripple’s guilt, with the Howey test
Ripple Labs, the crypto company that issues XRP, has demand to the court in charge of its litigation against the Securities and Exchange Commission (SEC), to grant summary judgment. This is because the SEC fails to demonstrate that the XRP it sold are securities.
Summary judgment allows the parties to reduce litigation costs and the courts to reduce hearing time. As a reminder, the regulator has been pursuing the company since 2020 for the sale of unregistered securities.
Defense attorneys cited the regulator’s failure to prove guilt with the Howey test. The Howey test refers to case law from the Supreme Court of the United States, to determine whether a transaction counts as an investment contract. If so, it must be subject to the disclosure and registration requirements under the Securities Acts of 1933 and 1934.
The test has three key components. If the party suspected of selling unregistered securities answers positively to all three levels of questioning, it is guilty. This is not the case with Ripple, according to the documents that we consulted.
The company did not make a promise to XRP buyers
So far, the SEC has failed every step of the test to prove Ripple’s guilt. Among other things, it failed to demonstrate that the buyers of the crypto invested that money in a joint venture, as required by the test. Additionally, under the guidelines of the test, the SEC defends that Ripple made promises to buyers. But she did not provide any proof of this assertion.
“The only mention of a pledge that the SEC cites is a clear statement that Ripple was not making one (…) The SEC has, in any event, failed to meet Howey’s three-element requirements »said Ripple’s lawyers.
According to Ripple, the SEC cannot meet the requirements of the Howey test. This prompted his attorneys to seek summary judgment in his favor. On social media, the demonstration by Ripple’s lawyers has boosted the crypto community’s confidence in the outcome of the lawsuit. For many, an SEC victory would create dangerous case law for the entire industry.
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