The legal battle between payment company Ripple and the US Securities and Exchange Commission (SEC) continues. Entering its second year, newly issued documents can provide the payment company with an advantage over commission.
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As of December 2020, the regulator accused the company and two of its executives of offering an unregistered security, the XRP token. When the legal battle began, it looked one-sidedly in favor of the Securities and Exchange Commission, but time appears to be working in the payment company’s favour.
According to Eleanor Terrett, a journalist for Fox Business, and James K. Phelan, a former federal prosecutor who has been following the case closely, two memos dating from 2012 may shed new light on the case. The documents revealed that Ripple performed a canonical analysis of the XRP token at the time.
The analysis was conducted by Perkins Coie, a US-based international law firm that specializes in commercial litigation, regulatory legal advice and intellectual property with clients such as Google, Amazon and Facebook. The first of these notes is dated February 8, 2021.
At the time, Chris Larsen and Jed McCaleb, founders of Ripple, were working on the decentralized network that would be known as the Ripple Network and its underlying token, called Ripple Credits in its first phase. Phelan said that the first report claimed that XRP was to be classified as insurance.
This is why the company changed its business plan and requested a second analysis from Perkins Coie, which was delivered in October 2012. The second document was bullish, concluding that the token “should not be considered a security,” but noted the potential risks that, Phelan said, that The Securities and Exchange Commission may vary.
James Phelan believes the memos show the company’s intent to comply, and it was assessing any potential risks 5 years before the digital assets became relevant to the US regulator. legal expert added:
It seems to me that Ripple has been very proactive, which is very important. There is certainly nothing in these notes to suggest that Ripple was reckless or ignored any major risks. In fact, the notes indicate the opposite – that Ripple was keen.
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According to Ripple’s general counsel, Stuart Alderoty, the documents conclude that XRP is “not an investment contract.” Therefore, documents can weaken the state that the organizer has been trying to build for more than a year. Aldrotti added The following is in the notes and the company’s 2012 thought process:
The fact that Ripple had the foresight to seek legal advice from a prominent firm in 2012 – in the absence of a clear court law and 5 years before the Securities and Exchange Commission started talking about digital assets is to be commended.
Brad Garlinghouse, CEO of Ripple and one of Accused By the SEC, he said the following regarding recent documents that came to light:
The truth is for everyone to read. What we see is that the Securities and Exchange Commission (SEC) waited 8 years to decide that it disagrees with this analysis, eliminating thousands upon thousands of XRP holders (who claim to be protecting them) in the process. So much for being mission-driven…
Additional comments from Gabriel Shapiro, general counsel at Delphi Digital Labs, weigh on the notes. The legal expert believes that it is unlikely that similar documents will reach the same conclusion as the legal and regulatory landscape changes.
This just shows how much legal opinions on regulatory issues for tokens have changed over the years
It’s very clear that Perkins Cui would never write a memo on these terms today
This doesn’t mean that they or Ripple did anything wrong – it just shows the evolution of legal/political situations https://t.co/Y3hhD30VBY
– _gabrielShapir0 (lex_node) February 19, 2022
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XRP investors seem to be reacting positively to the recent developments. With the larger cryptocurrencies taking a beating on the lower time frames, the sixth cryptocurrency by market cap is trading at $0.83 with a gain of 9% and 9.6% in the last day and 7 days, respectively.
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