The San Francisco-based FinTech firm Ripple has issued an official response to the allegations of U.S. Securities and Exchange Commission (SEC) allegations over the illegal sale of XRP.
According to court documents filed on March 4 in the United States District Court for the Southern District of New York, Ripple has adamantly refuted allegations put forth by the SEC that the company engaged in an illegal securities offering via the issuance of XRP to investors:
“Ripple denies it engaged in any offering of securities; denies the inaccurate characterization of the legal advice Ripple received regarding XRP; and denies that it engaged in a single ‘offering’ of XRP.”
Ripple claimed XRP did not fulfill the criteria for traditional securities regulation and denied that its original sale of the token did not constitute the SEC’s version of an “offering.”
It also claimed that if XRP was deemed a security, it would hurt its utility as a means of payment:
“Before this case, no securities regulator in the world has claimed that transactions in XRP must be registered as securities, and for good reason. The functionality and liquidity of XRP are wholly incompatible with securities regulation. To require XRP’s registration as a security is to impair its main utility… Treating XRP as a security… would subject thousands of exchanges, market-makers, and other actors in the gigantic virtual currency market to lengthy, complex and costly regulatory requirements never intended to govern virtual currencies.“
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