Ripple, which is facing a series of allegations from the US Securities and Exchange Commission (SEC) about whether or not its XRP product is a security and an investment contract, has hit back in a strongly worded rebuttal.
The firm described the SEC’s allegation that XRP purchases were equal to investment contracts as an “unprecedented and ill-conceived legal theory”.
The firm itself is listed as a defendant in the case, while two of its senior leaders – Christian Larsen and Brad Garlinghouse – are also named.
Blockchain-powered cryptocurrency provider and online money transfer enhancement service Ripple has continued to hit back strongly against allegations from an American regulator.
Ripple has in recent months been facing claims from the US Securities and Exchange Commission (SEC) about the way that it sold its cryptocurrency, XRP.
It stands accused of selling it as a security without going through the appropriate processes with the SEC first.
The move from the SEC has meant that senior figures at Ripple are also facing charges.
Brad Garlinghouse and Christian Larsen are both charged, as is the company itself.
However, this week, the firm has taken strong steps to rebut the allegations.
In a filing in the US District Court for the Southern District of New York, the company said that it disputes the SEC’s claim that XRP is a security.
It also hit back at the suggestion that the virtual currency it sold constituted an investment contract.
It said that those who purchase XRP do not have any long-term ownership claims over Ripple’s business.
“Ripple has never offered or sold XRP as an investment. XRP holders do not acquire any claim to the assets of Ripple, hold any ownership interest in Ripple, or have any entitlement to share in Ripple’s future profits,” it asserted.
Ripple appears to be attempting to site the dispute on the question of whether or not XRP is an investment contract with the ultimate potential benefit being a share in the firm’s profits.
“Those determinations are consistent with the economic reality that XRP functions as a store of value, a medium of exchange and a unit of account – not a share in Ripple’s profits,” the response added.
The extensive response, which was published on Ripple’s website, emphasized that Ripple “reserves its rights to request dismissal of the Complaint on any and all grounds”.
It went on to describe the global context of regulatory approaches to Ripple at the moment – claiming that financial markets oversight bodies in countries such as the UK have decided to label XRP as a cryptocurrency rather than a security.
“Securities regulators in the United Kingdom, Japan, and Singapore have likewise concluded that XRP is a virtual currency not subject to securities regulation,” it said.
It described the SEC’s allegation that XRP purchases are an investment as “an unprecedented and ill-conceived legal theory – with neither statutory mandate nor congressional authorization”.
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