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The SEC v. Ripple case moves forwards with each passing day. On Thursday, shortly after Ripple filed its Memorandum of Law in response to the SEC’s motion to strike, the regulatory body responded with its own Memorandum of Law, asking that the court dismiss the individual defendants’ motions.
The SEC also said that Ripple executive Chris Larsen “approved and directed” Ripple’s unregistered XRP offers and sales. The SEC said that Ripple’s executive was aware that Ripple’s offerings of XRP were “investment contracts,” claiming that he directly promoted XRP as an investment with the hope of benefiting from Ripple’s efforts.
Larsen was aware that such deals and purchases could be “wrongful under certain circumstances,” according to the regulatory agency. It went on to say,
“The Complaint pleads that Larsen was aware of his overall role in Ripple’s illegal distribution, that his own financial interests were aligned with Ripple’s interests and that he took steps to further them.”
The SEC charged Ripple CEO Brad Garlinghouse with treating XRP as an investment and being incentivized to maximise XRP’s trading price and volume. According to the same, Garlinghouse “understood the nature of the asset” and “monetized” his compensation by extensive sales. The execs were also criticised for breaking Section 5 of the above submission.
The executives, according to the SEC, have made “meritless arguments” in their own submissions.
The SEC has repeated a previous point in its new filing, namely, “Knowledge means awareness of the underlying facts, not the labels that the law places on those facts.”
Finally, the SEC said that the defendants participated in domestic offers and purchases of securities that “failed to comply with regulations.” According to the SEC, the defendants and Ripple Labs made substantial “offers” of XRP to US investors through marketing claims on Ripple’s website, Twitter account, and YouTube channel, as well as U.S.-based finance programmes, while also claiming to have addressed the dangers and possible benefits of purchasing XRP.
Larsen, on the other hand, has previously said that prior to 2017, the SEC had not given guidelines in the digital asset space. The SEC, on the other hand, explained that Larsen’s demands for punitive benefits were “timely” for actions occuring between 1 September 2015 and the date of filing the lawsuit. It contended,
“Larsen “explicitly acknowledged” that he was running risk that he would be considered the issuer of securities by the SEC in exchange for significant financial compensation… Larsen committed a discrete violation of Section 5 with each unregistered offer and each unregistered sale.”