Ripple Cites ‘Regulatory Uncertainty’ To Dismiss SEC Lawsuit
Lawyers of payment network and settlement system provider Ripple, submitted a supplemental letter on Monday to support their request for dismissal of an ongoing Securities and Exchange Commission case against them.
The document references a July 14 statement by SEC commissioners Hester Peirce and Elad Roisman opposing the agency’s enforcement action against Blotics, the operator of the once-popular cryptocurrency website Coinschedule.
Last week, the SEC placed a $200,000 fine on Coinschedule and its parent company Blotics. Later, SEC Commissioners Hester Peirce and Elad Roisman commented on the outcome of the case.
In their comments, Peirce and Roisman made several statements that suggest uncertainty around securities regulations.
Most notably, they stated :
“The only certainty we see is that people have questions about how to comply with the applicable laws and regulations.”
The Commissioners also noted that the “large number of factors and absence of weighting cut against the clarity the guidance was intended to offer” and said that applying rules to a “completely different token offering does not necessarily produce clear answers.”
They also observed a “decided lack of clarity” around the applications of securities laws. Furthermore, they noted that the application of the Howey Test—a set of criteria that is used to determine whether assets are securities—“is not crystal clear.”
If Ripple’s legal team is correct, it would mean that the SEC violated Section 17(b) of the Securities Act, which requires courts to take judicial notice of facts that are not subject to reasonable dispute and facts from sources that cannot be reasonably questioned.
The U.S. Securities and Exchange Commission lawsuit against Ripple backdates to December 2020. The regulator accused Ripple of conducting an ongoing and unregistered securities sale via the XRP token closely associated with its brand.
The SEC alleged Coinschedule, which profiled initial coin offerings (ICOs) from 2016 to 2019, secretly received compensation from digital asset issuers it was profiling. Blotics agreed to a settlement that included a penalty of $153,434 and an agreement to stop violating the anti-touting provisions.
Peirce and Roisman commented the settlement:
“There is a decided lack of clarity for market participants around the application of the securities laws to digital assets and their trading, as is evidenced by the requests each of us receives for clarity and the consistent outreach to the Commission staff for no-action and other relief.”
