- An undisclosed SEC memo has cast doubts on the agency’s initial stance concerning XRP’s status, adding a new layer of complexity to Ripple’s ongoing legal tussle.
- The memo did not outright classify XRP as a non-security but refrained from recommending enforcement, prompting questions about the SEC’s current allegations against Ripple.
The Memo That Shook the Courtroom
In an unfolding drama that reads like a legal thriller, an undisclosed memo from the Securities and Exchange Commission (SEC) has entered the spotlight, unsettling the agency’s heretofore clear-cut stance on the classification of Ripple’s XRP as a security.
The Intricacies of XRP’s Classification
For the uninitiated, the classification of XRP as a security or a non-security is a linchpin in Ripple’s ongoing legal dispute with the SEC. Traditional financial instruments like stocks and bonds are typically considered securities and thus fall under SEC regulations. Cryptocurrencies, however, occupy a nebulous zone, and their classification is subject to intense debate. A financial asset’s designation as a security implicates a stringent set of legal obligations and restrictions, which is why this memo is of seismic importance in this high-profile case.
Legal commentator John Deaton, in his discerning analysis, clarified that the memo did not explicitly state that XRP is not a security. Rather, it indicated a lack of enforcement recommendations, which can be deduced as the SEC’s initial reluctance to brand XRP as a security. This subtext can be instrumental in challenging the SEC’s current allegations against Ripple and its executives, Brad Garlinghouse and Chris Larsen, for selling XRP as an unregistered security.
I am not sure to what comment of @JohnEDeaton1 you refer but there was a memo the court did not order to be disclosed in which the SEC considered the issue and I think I recall John saying that had they concluded XRP was a security the SEC would have disclosed it. https://t.co/SIahrjWMaF
— bill morgan (@Belisarius2020) August 27, 2023
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Raising Questions on Ripple’s Alleged Misconduct
Deaton goes on to extrapolate that if the SEC itself harbored uncertainties regarding XRP’s status back in 2018, the agency’s current accusations against Ripple’s leaders for recklessly selling XRP seem, at best, to stand on shaky grounds. The memo’s details remain undisclosed, but its existence throws a wrench into the SEC’s prosecution strategy by challenging the consistency of the agency’s stance over time.
While the legal skirmish between Ripple and the SEC continues to unravel, this undisclosed document adds an intriguing, albeit confounding, element to the discourse surrounding XRP’s classification and Ripple’s supposed regulatory transgressions.
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