Ripple argued that XRP profits came from “market forces of supply and demand” rather than any contract between Ripple and XRP token holders.
The U.S. Securities and Exchange Commission (SEC) and Ripple Labs have both called for a federal judge to make an immediate ruling on whether Ripple’s XRP sales violated U.S. securities laws.
Summary judgments are submitted to the courts when a party involved believes there’s enough evidence at hand to make a ruling without the need to proceed to trial.
Both parties have called on Judge Analisa Torres to make an immediate ruling as to whether Ripple’s XRP sales violated U.S. securities laws. Ripple has argued that the SEC has run out of answers to prove XRP sales constituted an “investment contract,” while the SEC has held strong on its beliefs that it does.
Ripple CEO Brad Garlinghouse in a Twitter post on Sept. 17 said the filings made it clear that the SEC “isn’t interested in applying the law.”
“They want to remake it all in an impermissible effort to expand their jurisdiction far beyond the authority granted to them by Congress,” he said.
Today’s filings make it clear the SEC isn’t interested in applying the law. They want to remake it all in an impermissible effort to expand their jurisdiction far beyond the authority granted to them by Congress. https://t.co/ooPPle3QjI
— Brad Garlinghouse (@bgarlinghouse) September 17, 2022
Meanwhile, Ripple general counsel Stuart Alderoty noted that “after two years of litigation” the SEC is “unable to identify any contract for investment” and “cannot satisfy a single prong of the Supreme Court Howey test.”
In its motion for summary judgment, Ripple claimed that the SEC’s case “boils down to an impermissibly open-ended assertion of jurisdiction over any transfer of an asset.”
The motion also argued that the SEC cannot establish that XRP token holders could not “reasonably expect profits” based on Ripple’s efforts as there were no contract obligations between Ripple and XRP token holders.
On the other hand, the SEC’s own motion for summary judgment argued that there can be an “investment contract” without a contract, any rights granted to the purchaser, and without any obligations to the issuer.
But Ripple argued in its motion “that is not and should not be the law, because without these essential features there is nothing to which the Howey test can sensibly be applied.”
Ripple instead pointed to profits coming from “market forces of supply and demand,” something that the SEC “conceded” according to the Ripple motion.
The significance of this admission was highlighted by U.S. Attorney Jeremy Hogan in a Sept. 17 post on Twitter, stating that “these concessions are perfect for a summary judgment.”
The filing of the Ripple and SEC motions brought about mostly positive sentiment from the XRP community, with one Twitter user believing “the end is near”:
— Paul Macrae (@PaulMac_1975) September 18, 2022
The motion for summary judgment comes nearly two years after the SEC sued Ripple, former CEO Christian Larsen and current CEO Brad Garlinghouse in Dec. 2020 for allegedly raising $1.3 billion through unregistered securities sales through XRP.
If the court executes the summary judgment, the court ruling will have a profound impact on determining which cryptocurrencies constitute a security under U.S. securities laws.
The XRP token rose to highs not seen since July following the motion filing — reaching nearly $0.40, but has fallen slightly since then and is currently priced at $0.34, according to CoinGecko.