Ripple’s CEO Brad Garlinghouse and co-founder Chris Larsen have just appealed to Judge Analisa Torres in two separate motions to dismiss the US SEC’s amended complaint against Ripple Labs and its executives.
Attorneys representing Garlinghouse stated in the letter that the suit by the SEC against Ripple was just a “regulatory overreach.” The attorneys argued that the SEC’s accusations that Garlinghouse aided and abetted the sale of XRP was flawed on several fronts.
The letter reads: “The SEC fails to recognize the economic realities of Defendants’ transactions in XRP, the XRP market, and Ripple’s business, each of which exhibits none of the traditional characteristics of an investment contract under SEC v. W.J. Howey Co.”
The Howey Test is a staple tool used by the SEC to determine whether an asset is a security or not. Based on this test, the SEC asserts that XRP had all the qualities of a security per the Howey Test.
Nonetheless, Ripple Labs and its executives have reassured that XRP is a virtual currency, as confirmed by the Justice Department and FinCEN.
Garlinghouse’s XRP Holding Sale
The filing also touched upon the recent amended complaint filed by the SEC before the pretrial hearing on February 22, which claimed that Garlinghouse went against securities laws when he sold some of his XRP holdings through Ripple.
The embattled CEO has allegedly sold more than 60% of his XRP holdings worth about $160 million, a move that has gotten heavily criticized by the cryptocurrency community.
However, Garlinghouse’s attorneys have asserted that the SEC’s case against their client is baseless since there was no proof to show that those transactions occurred with the US. They noted that “the truth is that the vast majority of Mr. Garlinghouse’s XRP sales were made on foreign exchanges, and those transactions do not and cannot violate the federal securities laws.”
Meanwhile, the attorneys representing Chris Larsen noted in their letter that the SEC has failed “to state a claim against Mr. Larsen.” That said, they are urging that the lawsuit against their client get dismissed.
Garlinghouse recently stated that the SEC’s case was an “assault on crypto at large” and that Ripple “will not let SEC bully the entire [crypto] industry.”
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