Ripple General Counsel Says SEC Wants To “Remake The Law”

By Kevin • September 21, 2022 10:27 pm • Comments

The lawsuit between the SEC and Ripple may soon be getting close to a conclusion as the case is quickly approaching the two year mark.

Ripple General Counsel, Stuart Alderoty, commented that the company is feeling confident about the results of the lawsuit as the SEC has not been able to weaken Ripple’s case at all.

Alderoty shares that there is no evidence of any type of fraud or market manipulation when it comes to XRP and that the judge will soon make a decision that will decide whether or not Ripple violated any securities laws.

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So far, both legal parties have already filed summary judgement motions to the court which indicates that there is a strong push for the case to finally end.

CoinDesk reports:

Both the SEC and Ripple have filed summary judgment motions with the U.S. District Court for the Southern District of New York in a bid to avoid going to a full trial. CoinDesk sought comment from the SEC but a response was not available by press time.

In December 2020, the SEC sued Ripple Labs for allegedly selling XRP, a cryptocurrency closely tied to the company, as unregistered securities transactions.

The SEC alleges the company sold XRP tokens while letting investors believe they would get a substantial return on the company’s profits.

Alderoty, who has been with Ripple for nearly four years, reiterated his stance that Ripple does not fulfill the requirements set by the Howey Test in a U.S. Supreme Court case. The test helps determine whether or not something can be deemed a security, and therefore an “investment contract.”

“We believe that unless there is a contract for an investment, there’s no case and actually, there’s no authority for the SEC to even weigh in,” Alderoty said. “We believe that they fail on every single prong of the Howey Test.”

Alderoty also examines the SEC’s argument and explains why it doesn’t make sense.

Essentially, Alderoty shares that the SEC is trying to use common interest as a substitute for a common enterprise which does not work as they are two entirely separate things.

After all, Ripple did not make any promises to any XRP holder and is not under any investment contracts that makes them obligated to do so.

Everything is essentially done out of free will and the general counsel has suspicions that the company may have been selected by the SEC to set an example for the rest of the industry.

CoinDesk concludes:

The aftermath, however, led “nearly every U.S. exchange to delist or suspend trading in XRP,” Alderoty said, which erased “$15 billion in market capitalization” from the company and prompted it to move its operations “offshore.”

“Maybe they [the SEC] thought they [could] send a broader message to the entire market,” Alderoty said.

“But I think what they’ve learned is that if you challenge a well-resourced company, that well-resourced company can put on a very robust defense and really expose the SEC, that what [it’s] doing in this case is not applying the law.”

The SEC is “seeking to remake the law,” Alderoty said. “They’re engaging in litigation behavior to further a desired result rather than a faithful allegiance to the law.”

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