Ripple has used a viral tweet citing an email on the status of the XRP token from the U.S. Securities and Exchange Commission (SEC) sent to a user who questioned the regulator on whether the token was a security.
Late last year, a Twitter user going by “frank” reached out to the regulator in a bid to understand whether what they bought was a security or not “because there was no decision yet.”
In response, the SEC noted it had “not issued a determination on whether the cryptocurrency XRP is a security” and added that whether “a cryptocurrency is considered a security will depend on the characteristics and use of the cryptocurrency.”
Two months after the tweet was published, the SEC sued Ripple and two of its executives alleging they “raised over $1.3 billion through an unregistered, ongoing digital asset securities offering.”
Ripple is now citing the tweet in a court filing, regarding statement made by the former director of the SEC’s Division of Corporate Finance William Hinman, who had said he viewed XRP as an unregistered security.
In the filing, first reported on by Daily Hodl, Ripple argued the email shows Hinman’s testimony is “refuted by the SEC’s own communications to the public.” The fintech firm has said the regulator’s history with cryptoassets shows the SEC’s case is flawed as in 2017 Hinman “admitted” the “application of the federal securities laws to digital assets was ‘new for everyone’,” the firm said.
Ripple cited Hinman saying he did not think “people had completely thought through all the ways… the securities laws may apply to that activity,” and added:
This testimony, the documents produced – and potentially the documents that should be produced in discovery as a result of Defendants’ Motion – fatally undermine the SEC’s allegations that the Individual Defendants acted recklessly in failing to recognize Ripple’s sales of XRP as an unregistered securities offering as at that time, securities law experts of Mr. Hinman’s stature (to say nothing of the full Commission) had not reached that conclusion themselves, despite looking into the issue.
As CryptoGlobe reported, Ripple CEO Brad Garlinghouse has revealed the fintech firm is highly likely to go public after it settles the lawsuit the SEC filed. Garlinghouse said the company first started looking into how it could become publicly traded in early 2020, but noted that the SEC’s lawsuit hindered its plans. While it still plans on being listed on an exchange, it hopes to do so after it resolves its lawsuit with the SEC.
Cryptocurrency legal expert and XRP supporter Jeremy Hogan has revealed he believes Ripple’s legal battle with the SEC could have a positive outcome for the price of XRP.
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