Ripple’s case before the Securities and Exchange Commission threatens significant ripple effects for the industry.
On January 29, Ripple Labs filed its response to the SEC’s complaint. Ripple argued, as it has often done before, that XRP is not a security, i.e. H. An investment in Ripple, and therefore not under the jurisdiction of the SEC. Ripple is also ready to draw the rest of the industry into its battle to prevail.
A representative from Ripple told Cointelegraph:
“The SEC clearly picked two winners and ignored a growing and resilient industry that is much bigger than Bitcoin and Ether. In addition to the discovery we will seek directly in the lawsuit, we have a request under the Freedom of Information Act (FOIA ) filed for additional information on how the SEC determined Ether’s non-security status. ”
The FOIA inquiry in question, available here, questions the status of Ether. SEC officials have reiterated on several occasions that the presale may have been an offering of securities at the time, but Ether is sufficiently decentralized to be considered a commodity and therefore Ether trading in the US is under the jurisdiction of the Commodity Futures Trading Commission.
The FOIA request specifically requests “all communications with the Ethereum Foundation and / or other relevant companies (including, but not limited to ConsenSys) or people in the Aether Ecosystem (including, but not limited to Vitalik Buterin, Anthony Di Iorio , Charles) asked Hoskinson, Mihai Alisie, Amir Chetrit, Joseph Lubin, Gavin Wood and Jeffrey Wilcke) or attorneys or any other person representing the Ethereum Foundation or other relevant company or person in the ether ecosystem, as well as all documents, including internal communications , Analysis and other materials prepared or used by Director Hinman or any other current or former division chief, staff or commissioner in order to arrive at a determination that Aether is not safety, including drafts of Director Hinman’s statements about Aether and from SEC prepared analyzes employees. “
The query will likely contain a large amount of records from multiannual commission documents, given how long it took the Commission to make any statements in the first place.
The question of timing is of crucial importance in the ether as a security or goods discussion. The ether pre-sale took place years before the SEC published the DAO report. In response to the collapse of ether investments in the decentralized autonomous organization, the DAO report was the SEC’s 2017 statement that some cryptocurrencies are securities.
In the years that followed, there was enormous confusion as to what qualifies an initial coin offering as collateral or not. It’s important to note that Bitcoin, which has never had a presale, never shows up in these conversations. However, the SEC never tracked Ether. However, in December, the commission filed a landmark case with Ripple alleging that Ripple Labs’ sale of XRP was an ongoing sale of investment contracts in the company.
In its FOIA inquiry, Ripple relied heavily on the claim that Bitcoin and Ether are both controlled by China-based mining pools, playing on US regulators’ long-standing fears about Chinese digital asset control. Ripple is also asking for communication between the commission, specifically the company’s finance director, Bill Hinman, and key figures and lawyers for the Ethereum Foundation. While it is almost inconceivable that the SEC will step back from its numerous assertions that ether is a commodity at this stage of the game, Ripple appears to be aiming to undermine the legitimacy of this decision in order to bolster its own defenses.
The SEC’s case against Ripple has been going on for a long time, and Ripple has spent significant resources trying to fight it off. While XRP is also older than the DAO report, the main argument is that Ripple continues to control most of the XRP market in ways that the Ethereum Foundation, Vitalik Buterin and Joe Lubin, for example, don’t.
Since the SEC’s announcement, the price of XRP has collapsed and many US exchanges have delisted the token.