Ripple Labs was sued in June 2018 for violating the securities law. The last motion filed by Ripple’s legal team disappointed the community.
On September 19th, Ripple’s legal team filed its response to a lawsuit, which is already more than one year old, for allegedly manipulating the market and violating the securities law. However, it remains unclear whether XRP is a security or not, so the members of the cryptocurrency community have expressed their opinion about it.
Until the aforementioned date, the company had the duty to respond to a new complaint against it, within the framework of the lawsuit that was filed in June 2018 against Ripple Labs for allegedly violating U.S. legislation on securities, and performing a market manipulation to obtain economic benefits.
The most recent complaint was made on August 5th and gathered the very words of the Securities and Exchange Commission (SEC), to argue that the startup illegally sold unregistered securities. Ripple’s legal representatives responded to the complaint.
According to a community lawyer, who analyzed this response, among the allegations made by the legal team is the fact that the case was not filed on time (the sale would have been made in 2013, and the claim would have been made outside the framework of the three years established by law). Besides, the purchases of XRP were not made directly from Ripple directly but in the secondary market, and the statements of Ripple did not influence the purchases.
However, the motion does not clearly state that Ripple is not a security. Although it is made clear that Ripple’s legal team considers XRP to be a currency and thus not a security, the issue is not being analyzed and the court is not asked to give its verdict in this case. For this reason, the legal status of the cryptocurrency remains undefined.
However, the lawyer who is analyzing the issue states that to prepare a defense in this regard, the degree of decentralization of the Ripple’s blockchain should also be analyzed. For that reason, he considers that the motion is disappointing in that respect.
Facing this situation, a member of the community began a voting process on Twitter, to learn if users have used the cryptocurrency to pay for goods and services. At the time of writing this article, about 3,200 people participated in the voting process but only 30% responded affirmatively.
Despite this, the graphs that show the activity of the network report that the payments increased in August, with more than 137,000 payments, exceeding the previous all-time high, recorded at 135,000 for January 2018th. On Thursday, September 19th, a figure of only 58,000 payments was recorded.
For its part, the payment processor CoinGate reported that payments with XRP had increased 19% between May and July, and the cryptocurrency represented 3% of all payments made through CoinGate.
Beyond the Ripple community’s debate on whether or not XRP is a security, the outcome of this lawsuit is crucial to clarify how the U.S. securities laws apply to crypto assets in general. Before the motion filed by the legal team, the case promises not to be solved in the short term.
By Willmen Blanco