After two years of litigation, Stuart Alderoty, general counsel for Ripple, told CoinDesk TV’s “First Mover” that he saw “the beginning of the end” because the SEC filing had failed.
The legal battle between the U.S. Securities and Exchange Commission (SEC) and payment protocol firm Ripple Labs may soon be coming to an end, that is, if a federal judge rules the cryptocurrency firm n did not violate any federal securities laws.
Stuart Alderoty, general counsel for Ripple Labs, told CoinDesk TV that the cryptocurrency company felt “confident” and believed this could be “the beginning of the end” for the case, which began in 2020.
“There are no allegations of fraud in this case. There is no allegation of misrepresentation. There is no allegation of market manipulation,” Alderoty said during an appearance on CoinDesk TV’s “First Mover.” “It’s really a technical problem and we think it’s a problem that can be resolved in law by the judge. »
The SEC and Ripple have filed motions for summary judgment in the U.S. District Court for the Southern District of New York in an attempt to avoid a full trial. CoinDesk has sought comment from the SEC, but no response was available at press time.
In December 2020, the SEC sued Ripple Labs for allegedly selling XRP, a cryptocurrency closely tied to the company, as unrecorded securities transactions. The SEC says the company sold XRP tokens while leading investors to believe they would get a substantial return on the company’s earnings.
Alderoty, who has worked with Ripple for nearly four years, reiterated its position that Ripple fails to meet the requirements set by the Howey test in a US Supreme Court case. The test determines whether or not something can be considered a security, and therefore an “investment contract”.
We believe that unless there is an investment contract, there is no case and in fact the SEC doesn’t even have the power to intervene,” Alderoty said. “We think they fail every part of the Howey test. »
Aldertoy added that the SEC “does not identify any investment contract between Ripple and any holder of XRP,” and that there was no after-sale guarantee on behalf of Ripple for investors.
“What the SEC is suggesting is that a common interest is a substitute for a common enterprise and it is not,” Alderoty said. “We have not promised any XRP holder that we would take action, or be obligated to take action, on their behalf to do these things. »
Has Ripple been singled out among the various projects within the crypto ecosystem? He said the company may have been used by the SEC to lead by example. The aftermath, however, led to “nearly every U.S. exchange delisting or suspending XRP trading,” Alderoty said, which wiped out the company’s “$15 billion in market capitalization” and prompted it to move its operations “offshore”.
“Maybe they [the SEC] thought they [could] send a broader message to the wider 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 up a very strong defense and really expose the SEC, which [it’s] to do in this case is not to apply the law.
The SEC is “seeking to remake the law,” Alderoty said. “They engage in litigation behavior to achieve a desired outcome rather than loyal allegiance to the law. »