Thomas Daniels
The U.S. Securities and Exchange Commission (SEC) has been granted additional time to submit important legal documents in its ongoing case against Ripple Labs, as approved by Judge Analisa Torres. The extension allows the SEC to file its initial brief by March 22, with Ripple’s counterarguments due by April 22, and the SEC’s response to those arguments set for May 6, 2024.
This development pertains to the submission of remedies-related discovery materials by Ripple, which are crucial for outlining possible legal courses of action and consequences in the lawsuit.
The legal battle initiated in December 2020, centers around the SEC’s allegation that Ripple Labs, its CEO Brad Garlinghouse, and co-founder Chris Larsen, engaged in an unauthorized securities offering, raising $1.3 billion through the sale of XRP tokens. The SEC argues that XRP should be regulated as a security, demanding compliance with stringent regulations, whereas Ripple contends that XRP does not meet the criteria of a security and accuses the SEC of not providing adequate notice regarding its regulatory status.
The lawsuit has undergone various twists and turns, with a significant discussion point being the application of the “Howey test,” a legal benchmark for defining investment contracts under U.S. law. The SEC posits that XRP satisfies the Howey test’s criteria, a stance Ripple disputes.
In a notable ruling in July 2023, Judge Torres delivered a mixed verdict, declaring that XRP did not qualify as a security in its automated sales on cryptocurrency exchanges, yet deemed it a security in transactions with institutional buyers. This nuanced ruling underscores the complex nature of the legal scrutiny surrounding Ripple Labs and the broader implications for the cryptocurrency market.
