Supreme Court Backs Law Adaptation in SEC Vs Ripple Case
Ripple’s legal battle with the Securities and Exchange Commission (SEC) regarding the cryptocurrency XRP has received a major boost, thanks to the US Supreme Court’s decision to support Ripple’s argument. This decision could have far-reaching implications for Ripple and the broader cryptocurrency industry, as the court recognized the need for legal principles to adapt to the changing times.
Ripple Gets Support
Ripple’s defense in the SEC’s XRP case is supported by the Supreme Court’s decision to adjust factors rather than merely applying a precedent. Ripple contends that XRP should not be classified as a security under US law because it functions as a digital currency. Stuart Alderoty, Ripple’s General Counsel, shared this news via a tweet.
The concept of adjustment gained more weight after the Twitter case ruling by the Supreme Court, which declared that internet platforms are not responsible for the content produced by their users. This decision may impact upcoming regulations for cryptocurrencies.
The Ripple vs SEC lawsuit might set a precedent for the scope of the SEC’s power over digital currencies. However, while this case has caused a stir, the final verdict in Ripple may not provide a conclusive legal answer for all virtual currencies.
SEC Allegation of Ripple
The legal action taken by the SEC against Ripple pertains to the sale of unregistered securities by the company through a digital asset security referred to as XRP. Ripple, along with two of its top executives, Brad Garlinghouse and Christian Larsen, have been accused by the SEC of vending unregulated securities worth over $1.3 billion to the general public over several years through their company-provided XRP.
As per the allegation, Ripple allegedly raised money by selling XRP, a form of digital currency, to investors globally in an unregistered securities sale, starting from 2013. Further, Ripple reportedly distributed billions of XRP as payment for services such as labor and market-making, without receiving any monetary compensation.
Ripple is arguing the SEC’s assessment on two grounds. First, it argues that the XRP sale doesn’t fulfill the requirements of an investment contract. Second, Ripple has always stressed the difference between itself and XRP, maintaining that it has operated as a cryptocurrency and has been exchanged as such, and thus shouldn’t be labeled as a security under US regulations.