The federal judge, Judge Analisa Torres, has been asked to make an immediate ruling in the Ripple and U.S. Securities and Exchange Commission (SEC) on whether the sales of XRP have violated the country’s securities law or not.
Ripple and SEC have called for a summary judgement in separate motions filed by the parties on September 17 in the U.S. District Court Southern District of New York.
Summary Judgement is the outcome of a case decided summarily purely based on the documentary evidence produced before the court by the parties, without the need to go for trial proceedings.
According to Ripples’ argument, the SEC does not have enough proof to show that XRP sales were an “investment contract” whereas the SEC is still firm with its beliefs.
Stuart Alderoty, the counsel for Ripple, tweeted that despite the case going on for two years the SEC “is unable to identify any contract for investment” and has failed to qualify even a single prong of the Howey Test laid down by the Supreme Court.
Brad Garlinghouse, the CEO of Ripple, tweeted on September 17 stating that it’s evident that the SEC “isn’t interested in applying the law,” based on its filings in the court. “They want to remake it all in an impermissible effort to expand their jurisdiction far beyond the authority granted to them by Congress.”
Ripple has claimed that SEC’s case “boils down to an impermissibly open-ended assertion of jurisdiction over any transfer of an asset,” in its motion for summary judgement.
They also argue that there was no contractual obligation on Ripple to ensure that XRP token holders get profit, hence, the SEC cannot establish that XRP token holders “reasonably expect profit” based on the exchange’s efforts.
Whereas, the SEC has argued that there can be an “investment contract” without a contract in its motion for summary judgement. It states that there were certain rights granted to the purchaser without any obligations to the issuer about the same.
Ripple had argued in its motion that it “is not and should not be the law, because without these essential features there is nothing to which the Howey test can sensibly be applied.”
Instead, according to the Ripple motion, profits were attributed to “market forces of supply and demand,” something that the SEC “conceded.”
Its significance was highlighted by U.S. Attorney Jeremy Hogan in his tweet on September 17, he stated that “these concessions are perfect for a summary judgement.”
The community reacts to the case
One Twitter user stated “the end is near” as the news of the filing by parties asking for a summary motion was known and the XRP community is reacting positively to the news.
The SEC sued Ripple, former CEO Christian Larsen and current CEO Brad Garlinghouse in December 2020 alleging that they have raised $1.3 billion through the sales of XRP, unregistered security. After two years of litigation, the motion for summary judgement was finally filed by the parties.
If the summary judgement is passed by the court, it will impact the regulation of cryptocurrencies that are considered “security” under US laws.