Ripple has issued an official response to the U.S. Securities and Exchange Commission (SEC) allegations over the illegal sale of XRP tokens, which SEC claims are unregistered security. In the court documents filed in the Southern District of New York, the word “denies” comes up 440 times as Ripple refutes the SEC’s allegation that the firm engaged in an illegal securities offering when they first issued XRP to investors.
Ripple denies it engaged in any offering of securities.
The official court document reads, “Ripple denies it engaged in any offering of securities; denies the inaccurate characterization of the legal advice Ripple received regarding XRP; and denies that it engaged in a single ‘offering’ of XRP.” “Ripple claimed XRP did not fulfill the criteria for traditional securities regulation and denied that its original sale of the token did not constitute the SEC’s version of an “offering,” it added. Ripple has strongly disputed the claims of XRP being security. “Before this case, no securities regulator in the world has claimed that transactions in XRP must be registered as securities, and for a good reason,” Ripple said in the response.
“The functionality of XRP is incompatible with securities regulation.”
Ripple noted in its response that the functionality and liquidity of XRP are wholly incompatible with securities regulation. “To require XRP’s registration as security is to impair its main utility… Treating XRP as security… would subject thousands of exchanges, market-makers, and other actors in the gigantic virtual currency market to lengthy, complex, and costly regulatory requirements never intended to govern virtual currencies,” Ripple Labs said in its response to the allegations. Earlier, the SEC filed an action against Ripple Labs Inc. and two of its executives for raising over $1.3 billion through an unregistered digital asset securities offering. Since the lawsuit, Ripple has faced a lot of troubles as several exchanges delisted XRP from their platforms, and recently the firm ended its partnership with MoneyGram.