Regulation
XRP Lawyer Says SEC Knows Ripple ODL Sales Are Not Investment Contracts
In a recent filing, the U.S. Securities and Exchange Commission (SEC) opposed Ripple’s motion to seal and redact evidence related to remedies briefing and documents. Moreover, the SEC urged the court to order the disclosure of Ripple’s business details from the agency’s March 22 remedies briefing.
However, Ripple had previously requested that financial reports, post-complaint XRP institutional sales details, and other sensitive information remain confidential due to the high risks to the firm. Amid the chaos, Bill Morgan, a pro-XRP advocate, underscored that the SEC alredy knows that Ripple’s On-demand Liquidity (ODL) sales aren’t investment contracts.
SEC Mentions Ripple ODL Sales In Filing
Pro-XRP lawyer Bill Morgan shared a snapshot from the SEC’s latest response. The snapshot highlighted, “The same is true for Ripple’s aged securities offering and sales information. Ripple wants to hide the extent to which it offered XRP at discriminatory prices. But the period when Ripple was offering discounts goes back to 2014 and ended in December 2020.”
It added, “Ripple has not shown how the discounts it offered four years ago or more would matter, particularly since Ripple seeks to avoid remedies by claiming it ‘has changed the way it sells XRP and changed its contracts.’” in addition, the SEC emphasized that Ripple’s current contracts are not the ones under scrutiny.
The agency further added, “Indeed, the contracts at issue are not ODL contracts—the only type of Institutional Sales contracts Ripple claims it enters into today… none of Ripple’s current contracts contain lockups. The redactions the SEC opposes thus do not reveal ‘long-term business plans of any kind.’”
Lawyer Explains SEC’s Stance On ODL Sales
Morgan elaborated on the SEC’s position, explaining, “The SEC clarifies that none of the sales to institutions with discounts were ODL contracts.” He added, “The SEC would have reviewed the ODL contracts and observed that they do not have discounts or the features referred to in the summary judgment that made institutional buyer contracts to be investment contracts according to judge Torres.”
Furthermore, Morgan pointed out a key distinction in the nature of ODL contracts. He noted that the ODL contracts require customers to buy XRP at market price and to use the tokens in ODL transactions. Moreover, he emphasized that these customers agree on not holding them as investments. Hence, he questioned why Judge Torres categorized these contracts similarly to other institutional agreements.
The lawyer speculated, “It remains a mystery why Judge Torres lumped them in with the other contracts with Institutions.” In addition, the pro-XRP attorney noted that the SEC knows that its stance on the ODL sales wrong. He stated, “I bet SEC knows the ODL contracts are not investment contracts.” This ongoing legal battle between the SEC and Ripple highlights the complexities surrounding cryptocurrency regulation and the definitions of securities.
Also Read: Ripple SEC Lawsuit: SEC Files Opposition to Sealing XRP Details, Here’s Everything
SEC Files Opposition Against Ripple
On Monday, May 20, the U.S. SEC filed a response opposing part of Ripple’s motion to seal and redact certain documents. The SEC argues that Ripple’s attempt to “conceal financial and securities sales information” is unlawful, as the information is crucial for the remedies phase and public understanding of the penalties.
Whilst, Ripple seeks to redact details such as the amount of its current assets, recent sales figures, revenues and expenses, and discounts offered to institutional investors. However, the SEC contends that these details are essential for determining penalties, injunctive relief, disgorgement, and investor harm. They argue that Ripple has not provided sufficient evidence that making this information public would cause significant harm.
Furthermore, the SEC states that the financial information in question is outdated and that some of it is already publicly available. The regulator also asserts that Ripple’s reliance on previous court sealing approvals does not apply to the current situation. The SEC maintains that transparency is necessary for the court’s decisions and public accountability.
Also Read: XRP Lawsuit: Ripple Moves 50M XRP Ahead Major Deadline, What’s Happening?
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