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The Securities and Exchange Commission (SEC) has admitted that before taking legal action against Ripple, he never informed third-party investigators that he considered XRP a security.
“… The Commission admits that prior to the filing of this case, some third parties inquired about the legal status of XRP. However, the Commission did not express an opinion one way or the other in response.
The comment came out in an “SEC Admission Application” document attached to the latest court file. Moreover, this evidence now constitutes an official admission in the case.
But why is this important?
How does this help to spread?
The ongoing SEC lawsuit against Ripple is currently still in the discovery phase. Since December 2020, the two parties have clashed, on several motions, in order to verify their respective claims.
Overall, Ripple definitely came out on top. For example, by forcing the SEC to respond if Ethereum is a recent security. This point reinforces Ripple’s case, regardless of the SEC’s response.
“If the answer is ‘no’, that opens the door for Ripple to compare XRP to Ether. And as we know, only Ethereum had an ICO …
“Yes” is not a politically unfathomable answer for the SEC. “
An important aspect of the defense comes down to a “fair opinion”. This claims that Ripple assumed that XRP, Bitcoin, and Ether were equivalent in the eyes of the SEC.
And, while former SEC Director William Hinman gave the green light to both Ether and Bitcoin, Ripple assumed the same for XRP. As a result, without fair notice, the company was not aware of having violated applicable securities law.
Regarding the latest explosive admission by the SEC, by stating that they refused to clarify the legal status of XRP prior to litigation, they effectively played in the fair notice defense by conceding that no fair notice had been given.
However, that alone is not a settled case, as Ripple will still have to demonstrate that XRP has not been sold in a manner consistent with an offer of securities.
SEC Demonstrates ‘Regulation Through Litigation’ With Coinbase
Coinbase CEO Brian Armstrong tweeted on Wednesday about his dealings with the SEC regarding his platform’s lending program.
Armstrong said the Commission viewed the program as security and threatened to take legal action if it launched the new feature. Worse yet, Armstrong said the agency declined to explain how it came to the decision.
Billionaire investor Mark Cuban criticized the SEC response as “Settlement via litigation. He advised Armstrong to “go on the offensive”.
In a funny version of that, Ripple CEO Brad Garlinghouse responded to Armstrong by tweeting a Die Hard movie meme captioned “Welcome to the party, mate.”
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