Ripple, the distributed ledger company in the crosshairs of the U.S. Securities and Exchange Commission, announced Friday that it has filed its initial response to the agency's lawsuit in federal court.
The SEC sued Ripple last month, claiming in its complaint that the company "raised funds, beginning in 2013, through the sale of digital assets known as XRP in an unregistered securities offering to investors in the U.S. and worldwide." Market-facing firms across the crypto industry responded to the lawsuit by delisting or suspending trading of XRP, among other actions.
The response, filed Friday, asserts that the SEC's lawsuit is premised on "an unprecedented and ill-conceived legal theory"
"That theory ignores, among many other things, that XRP performs a number of functions that are distinct from the functions of “securities” as the law has understood that term for decades. For example, XRP functions as a medium of exchange — a virtual currency used today in international and domestic transactions — moving value between jurisdictions and facilitating transactions. It is not a security and the SEC has no authority to regulate it as one," the firm wrote in the introduction of its 93-page response.
Concurrent with the court response, Ripple said that it has submitted a Freedom of Information Act request with the SEC, seeking information on several fronts, including any determination that Ether -- the native cryptocurrency of the Ethereum network -- is not a security, and "[l]etters regarding Chinese control of bitcoin and ether."
In a statement outlining Friday's actions, Ripple said that "[a]lthough the legal process is slow, we are working to get this resolved as quickly as possible to bring clarity to the broader market."
"Moving quickly is important because, as you know, since the SEC filed its complaint, XRP lost almost half of its market value, causing retail holders of XRP with no connection to Ripple– the very people the SEC purports to protect – to suffer billions of dollars in losses. What’s more, part of the SEC’s mission is to maintain orderly markets… and yet their overreach created havoc in the market," wrote Stu Alderoty, Ripple's general counsel.
The full court response can be found below: