In an important development that can have crucial implications for the ongoing legal case between Ripple and Security and Exchange Commission (SEC), Ripple has been granted access to the regulator’s internal communication on the procedure how it defines the cryptocurrency either as a security or non-security instrument. According to the report published by law360, Ripple is hoping to find evidence in the form of internal communication in which SEC accepted that Ripple is just another cryptocurrency similar to Bitcoin and Ethereum. If Ripple proves this in court, it will get the lawsuit against it dismissed as non-security instruments are outside the SEC’s purview.
The turn of events is important for Ripple as the organization faces the charges of violations of US securities laws. In a case file against the company and its top executives, SEC has alleged that by selling XRP directly to the retail customers, Ripple has acted against the country’s laws on securities. This case’s outcome may prove instrumental in defining when and how a cryptocurrency can be defined as a security, and implications will be important as others will take a cue from the judgment to make decisions in the future.
Sarah Netburn, US Judge in the Southern District Court, New York, granted Ripple access to the minutes and memos of SEC on how it defines the cryptocurrency. One of the lawyers representing Ripple, Mathew Solomon, exuded confidence that this could be a game-changer if they can find out the SEC’s views on Ripple and how the agency defined it as a security rather than currency.
In December last year, SEC sued top executives of Ripple, Brad Garlinghouse (CEO), and Chris Larsen (Executive Chairman), alleging that they sold XRP worth $1.38 billion in contravention to the securities laws of the US. Interestingly, it took SEC eight years to file a suit against Ripple, which is an unusually higher delay in framing charges against a person or company.