In its current filing, the United States Securities and Exchange Commission (SEC) opposed the demand made by Ripple and its co-founder Chris Larsen to address interrogatories relating to the company’s application of the Howey test for identifying the status of XRP
Simply just recently, the SEC opposed Ripple’s demand to reveal staff members’ crypto holdings to produce documents concerning its “trading preclearance decisions.”
The questionable Howey test
In August, Ripple and Larsen submitted a movement to oblige the SEC to react to its interrogatories, following the regulator’s “vague and ambiguous” responses relating to the application of the Howey test to XRP deals.
As a reaction, the company submitted its opposition to address interrogatories “identifying its theory of how the Howey Test applies to virtually all of Defendants’ transactions in XRP over the last 8 years,” as mentioned by James K. Filan, a previous federal district attorney for the United States Lawyer’s Workplace for the District of Connecticut, who likewise shared the filing on Twitter.
#XRPCommunity #SECGov v. #Ripple #XRP The SEC has actually submitted its Opposition to the Movement to Oblige it to address interrogatories recognizing its theory of how the Howey Test uses to practically all of Accuseds’ deals in XRP over the last 8 years.https:// t.co/ c758L9MoCJ
— James K. Filan (@FilanLaw) September 8, 2021
The continuous suit versus Ripple was submitted last December by the SEC, declaring that the business’s sale of XRP was unregistered security offering worth more than $1.38 billion.
Identifying whether and why deals including XRP make up “investment contracts” and for that reason securities topic to disclosure and registration requirements are main to the SEC’s suit.
The SEC’s approach for establishing what makes up a security includes the so-called Howie test, under which “an investment contract exists when there is the investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others.”
SEC’s arguments for rejecting additional information
“Defendants waited until the end of fact discovery, more than seven weeks after receiving the SEC’s first interrogatory responses, to inform the SEC they considered the responses deficient,” grumbled the company, while opposing the demand to offer additional information.
“Defendants’ argument here boils down to a complaint that they do not like the answers they received to the interrogatories at issue, in large part because the SEC’s and Defendants’ interpretation of the applicable law differs,” included the regulator.
In a September 8 letter to United States Magistrate Judge Sarah Netburn, the regulator discussed that it had actually properly reacted to Ripple’s concerns, including that “the SEC is not required to answer the interrogatories in a way that adopts the Defendants’ incorrect reading of the law.”
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