Ripple Cites SEC Commissioners’ Remarks to Support Dismissal of Case

Lawyers for Brad Garlinghouse and Christian Larsen highlighted the commissioners’ criticism of an unrelated settlement that cited uncertainty about which tokens are considered securities.

AccessTimeIconJul 19, 2021 at 8:23 p.m. UTC
Updated Sep 14, 2021 at 1:27 p.m. UTC
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Ripple lawyers submitted a supplemental letter Monday to support their request for dismissal of an ongoing Securities and Exchange Commission case against them.

The document notes a July 14 statement by SEC commissioners Hester Peirce and Elad Roisman opposing the agency’s enforcement action against Blotics, the operator of the once-popular cryptocurrency website Coinschedule.

The lawyers representing Ripple CEO Brad Garlinghouse and co-founder Chris Larsen highlighted the commissioners’ criticism that the enforcement action against Coinschedule did not pinpoint which tokens the site promoted were securities, as well as wider uncertainty about how tokens are defined.

“The Public Statement confirms the Individual Defendants’ arguments that there was (and remains) significant regulatory uncertainty regarding when digital assets may be classified as securities by the SEC,” the Ripple lawyers wrote in their filing.

The lawyers added: “The SEC’s aiding and abetting claim requires that 'it show that the Individual Defendants knew or recklessly disregarded that Ripple’s offerings and sales of XRP required registration as securities and that those transactions were improper.’”

The SEC alleged in December 2020 that Ripple had conducted an ongoing and unregistered securities sale via the XRP token closely associated with its brand.

The SEC alleged Coinschedule, which profiled initial coin offerings (ICOs) from 2016 to 2019, secretly received compensation from digital asset issuers it was profiling. Blotics agreed to a settlement that included a penalty of $153,434 and an agreement to stop violating the anti-touting provisions.

“There is a decided lack of clarity for market participants around the application of the securities laws to digital assets and their trading, as is evidenced by the requests each of us receives for clarity and the consistent outreach to the Commission staff for no-action and other relief,” Peirce and Roisman wrote following the settlement.

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