A recent development in the SEC vs. Ripple lawsuit has seen the submission of a plea from Ripple lawyers representing individual defendants, requesting dismissal of the ongoing lawsuit. Ripple CEO Brad Garlinghouse and co-founder Chris Larsen’s lawyers had submitted a letter on Monday, backing their plea for dismissal of the ongoing Securities and Exchange Commission (SEC) case against them.
#XRPCommunity #SECGov v. #Ripple #XRP Individual Defendants file letter and Peirce & Roisman statement as supporting Motions to Dismiss amid "significant regulatory uncertainty regarding when digital assets may be classified as securities by the SEC."https://t.co/I0tDYjpA6B
— James K. Filan (@FilanLaw) July 19, 2021
Defendant’s plea for dismissal
The letter has attached statements by SEC commissioners Hester Peirce and Elad Roisman on 14th July. The statement highlights Pierce and Roisman’s criticism of regulatory actions against Blotics, the parent company of Coinschedule. The defense lawyers have pointed out that these comments are ground for proving regulatory uncertainty on SEC’s part and are evidence to base their ‘motion to dismiss’ on.
The Plea stated, “the (“Public Statement”) in connection with the SEC’s settled action with Blotics, Ltd., formerly known as Coinschedule Ltd. (“Coinschedule”), for violating Section 17(b) of the Securities Act. 1 The Public Statement further supports the Individual Defendants’ motion to dismiss for failure to adequately plead that they allegedly aided and abetted Ripple’s offers or sales of unregistered securities.” They added, “The SEC’s aiding and abetting claim requires that ‘it show that the Individual Defendants knew or recklessly disregarded that Ripple’s offerings and sales of XRP required registration as securities and that those transactions were improper.’”
SEC’s uncertainty on securities regulations
Recently, SEC filed Blotics and Coinschedule with $200,000, and the commissioners commented caught the eye of Ripple Lawyers. Pierce and Roisman had made statements against the uncertainty of securities regulations.
“The only certainty we see is that people have questions about how to comply with the applicable laws and regulations.”, according to the commissioners.
They agreed that there lies a lack of clarity around implementing securities laws and said that there are no definite criteria to determine if an asset is a security or not. Along with agreeing to uncertainty around regulatory laws, the commissioners also stated that even if the staff is given guidance on handling regulatory proceedings, there is a lack of clarity around the guidance that is required.
“Although the Commission staff has provided some guidance, the large number of factors and absence of weighting cut against the clarity the guidance was intended to offer. Market participants have difficulty getting a lawyer to sign off that something is not a securities offering or does not implicate the securities laws; they also cannot get a clear answer, backed by a clear Commission-level statement, that something is a securities offering.”, the commissioner added.
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