Ripple requests SEC members to disclose their XRP holdings. Ripple’s legal team has made a move aimed at SEC members disclosing their XRP holdings. The move also aims to reveal the SEC’s pre-approval policies on cryptocurrencies, including ETH, XRP, and BTC. Cryptocoin. com, the SEC accused Ripple of violating securities laws through the sale of XRP in December 2020.
SEC members may need to disclose their XRP holdings
If successful, the move will enable the U.S. Securities and Exchange Commission (SEC) to release documents on whether its members are allowed to trade cryptocurrencies. Ripple’s move specifically seeks information about XRP holdings of commission employees. It also aims to find data on the SEC’s pre-approval decisions regarding XRP, Bitcoin, and Ethereum, i.e. any policy that might prevent SEC employees from transacting in these cryptocurrencies.
The move is aimed at allowing the SEC to anonymously provide information individually or in aggregate. According to the filing, the SEC has not adopted any policy that restricts SEC employees’ crypto transactions until January 2018. This would allow employees to invest in Ripple’s XRP token. If Ripple’s accusations are true, the SEC has placed stricter regulations on Ripple than it has on its own employees. The filing states, “This undermines the SEC’s claims that Individual Defendants were careless in determining that XRP offers and sales in 2013 were securities.”
XRP case progresses slowly
The SEC filed a lawsuit against Ripple in December 2020 when it claimed that the company’s ongoing XRP token sales constitute an unregistered security offering. This is the latest development in the case. In recent months, Ripple has relied on defenses such as the lack of nedollarsik, differences from other SEC lawsuits, and summoning a former SEC member to testify. It is not yet clear when the case will end. Recent estimates from Ripple community attorney Jeremy Hogan suggest that a summary decision will not be made until early 2022.
Can litigation be over after the SEC announces the Howey Test that Ripple has requested?
The legal battle between the United States Securities and Exchange Commission (SEC) and Ripple Labs is unlikely to end anytime soon. The two sides are relentlessly making counter-moves to refute the claims of the other, as well as trying to gather relevant information. Ripple has now made a move to force the SEC to disclose how the Howey Test has been applied to nearly all Ripple transactions in XRP over the past eight years. Even after Judge Netburn’s repeated insistence, the SEC repeatedly refused to provide relevant information on how Howey would apply to Ripple’s transactions, calling it baseless. “The SEC adheres to its position that the allegations sought are irrelevant and refuses to provide concrete, non-evasive answers,” the defendants write.
The Howey Test is a test for the SEC to decide whether an investment is a security. Key factors include money or assets invested in a joint business or company by investors expecting profits. Also, these profits must come from the efforts of the entrepreneur and the investors will have no control over this. However, is this test accurate? The defendants are now seeking statements from the SEC about how Howey filed this lawsuit and the factual support for this argument. According to the defendants, this is basic information necessary for the defense. Ripple also wants the SEC to clarify whether BTC and ETH are securities and provide a real basis.