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The blockchain startup noted that the SEC is unwilling to accept XRP’s utility. The Ripple general counsel also said that the SEC action has unnecessarily created doubt among investors leading to their huge financial losses with falling XRP.
Thus, in its response, Ripple notes that the SEC is deliberately ignoring that XRP crypto has utility. In its 93-page filing on Friday, January 30, Ripple has pushed back against the SEC allegations. The filing adds Ripple’s XRP is not an investment contract or security. Similarly, the sales or distribution of XRP is not an investment contract. It also added that the SEC lawsuit is based on an “unprecedented and ill-conceived legal theory”.
“That theory ignores, among many other things, that XRP performs a number of functions that are distinct from the functions of “securities” as the law has understood that term for decades. For example, XRP functions as a medium of exchange – a virtual currency used today in international and domestic transactions – moving value between jurisdictions and facilitating transactions. It is not a security and the SEC has no authority to regulate it as one,” the firm wrote.
“The functionality and liquidity of XRP are wholly incompatible with securities regulation. To require XRP’s registration as a security is to impair its main utility,” noted the blockchain firm further.
Ripple Puts a Strong Rebuttal after the SEC Lawsuit Related to XRP
Following the SEC lawsuit in December 2020, a number of Ripple partners have distanced themselves from the company. Besides, several crypto funds have also reduced exposure to XRP. This led to the severe crash in XRP price and is now below $0.50 slipping to the 5th crypto ranking position from 3rd. More importantly, it has led to huge losses for retail investors.
Stu Alderoty, Ripple’s general counsel said that the legal process is slow. However, Ripple is working to get things resolved as soon as possible and thus bring more clarity to the matter. The counsel further added:
“Moving quickly is important because, as you know, since the SEC filed its complaint, XRP lost almost half of its market value, causing retail holders of XRP with no connection to Ripple– the very people the SEC purports to protect – to suffer billions of dollars in losses. What’s more, part of the SEC’s mission is to maintain orderly markets… and yet their overreach created havoc in the market.”
Hopefully, Ripple solves the matter in due course so that investors get clarity about any further action.