Pro-XRP Lawyer Says SEC Knows Ripple ODL Sales Are Not Investment Contracts

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As a researcher with experience in cryptocurrency regulation, I believe that the ongoing legal battle between the SEC and Ripple highlights the complexities surrounding securities regulations and the definitions of investment contracts. The recent filing by the SEC opposing Rippe’s motion to seal and redact evidence related to remedies briefing and documents is a significant development in this case.

The SEC has objected to Ripple‘s request to keep certain information related to their remedies briefing and documents confidential in their recent court filing. Additionally, they have asked the court to make public Ripple’s business details mentioned in the SEC’s March 22 remedies briefing.

Despite Ripple’s prior request for confidentiality regarding financial reports, XRP sales details following complaint, and other sensitive information due to the significant risks involved, Bill Morgan, a supporter of XRP, emphasized that the SEC is already aware that Ripple’s On-demand Liquidity (ODL) sales do not constitute investment contracts.

SEC Mentions Ripple ODL Sales In Filing

Lawyer Bill Morgan, who supports Ripple, posted a picture of the SEC’s most recent reply. The image called attention to the following statement: “The same applies to Ripple’s outdated securities offerings and sales data. Ripple is attempting to conceal the fact that it sold XRP at preferential prices for an extended period, which dates back to 2014 and concluded in December 2020.”

The SEC pointed out that Ripple’s past discounts, which were offered more than four years ago, have not been adequately explained by the company in terms of their relevance to the ongoing case. Furthermore, it was highlighted that the current contracts being used by Ripple are distinct from those under investigation.

The agency clarified, “In fact, the contested agreements are not ODL contracts – the sole Institutional Sales contract type Ripple allegedly uses now. None of Ripple’s present contracts include lockups. Consequently, the redactions the SEC objects to do not disclose any long-term business plans.”

Lawyer Explains SEC’s Stance On ODL Sales

The SEC clarified that no sales with discounts to institutions were over-the-counter (OTD) contracts. I personally believe that the SEC would have examined these OTD contracts and noticed they didn’t include discounts or other features identified by Judge Torres that classified institutional buyer contracts as investment contracts.

Morgan made an important observation regarding ODL (On-Demand Liquidity) contracts. He highlighted the unique aspect that customers must purchase XRP at current market prices and utilize the tokens for transactions. Furthermore, he underscoreed that these clients do not intend to keep the XRP as investments. Therefore, Morgan raised queries about why Judge Torres classified ODL contracts in the same category as other institutional arrangements.

As a crypto investor following the ongoing legal battle between the SEC and Ripple, I can’t help but ponder over the judge’s decision to group XRP sales with those of institutions. It’s still unclear why Judge Torres chose this route. Moreover, the pro-XRP attorney made it clear that the SEC acknowledges their mistake in considering the ODL (On-Demand Liquidity) sales as investment contracts. I firmly believe that they are not, and the SEC is well aware of this misclassification. The intricacies of cryptocurrency regulation and securities definitions continue to unfold in this high-stakes legal battle.

SEC Files Opposition Against Ripple

On May 20, 2023, the U.S. Securities and Exchange Commission (SEC) filed a response in opposition to Ripple’s motion to conceal specific documents. According to the SEC, Ripple’s attempt to hide financial and securities sales information is against the law. The SEC emphasizes that this information is essential for determining remedies and ensuring transparency regarding the penalties for the public’s understanding.

While Ripple aims to withhold specifics like current assets, sales figures, revenues, expenses, and institutional investor discounts, the SEC insists that these data points are crucial for assessing penalties, granting injunctions, calculating disgorgement, and evaluating investor damages. The SEC asserts that Ripple has failed to present compelling evidence showing that disclosing this information would result in substantial harm.

The SEC emphasizes that the financial data at issue is outdated and some parts are already in the public domain. Additionally, the SEC argues that Ripple’s prior court approvals for sealing information are not applicable to the current situation. Transparency is crucial for the court to make informed decisions and ensure public accountability, according to the regulatory body.

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2024-05-21 11:42