Just a few days ago, the US Securities and Exchange Commission (SEC) and Ripple Labs presented a joint letter with the court agreeing on common deadlines, each outlining the “legal basis for claims and defenses.
” The letter was a “clear victory” for Ripple, as lawyer Jeremy Hogan noted in a legal analysis. While Ripple was convinced by the facts, the SEC’s view lacked any real foundation.
Presumably because the SEC understands this now, he filed an amended complaint to the court yesterday. In addition, lawyer Hogan published a new video on the subject to present his legal opinion on the matter.
As Hogan points out, the SEC filed a modified 97-page complaint, and Hogan had to go through all 97 pages to find the changes. Ultimately, according to the lawyer, the changes were “two to three fundamental changes”.
First, the SEC added genuine details that were not the first to file a complaint regarding Ripple’s co-founders Chris Larsen and Brad Garlinghouse. As Hogan points out, it is very rare for the SEC to take action against individuals as well, because sanction is extremely difficult. The accused must prove their “knowledge of intent”.
“It is not enough for the individual defendants for the SEC to prove that XRP is a security. In addition, individual defendants must demonstrate that they know this, know it to be wrong and still maintain the sales. So the struggle over whether the SEC has received letters of opinion from Ripple’s lawyers warning them that XRP is potentially a security will be a major issue. ”
According to Hogan, the amended complaint is ultimately a result of the requests by Larsen and Garlinghouse to dismiss individual cases. In addition, the amended complaint was previously announced by the SEC in its February 15 joint letter, which stated that they were “planning to file an amended complaint”. According to Hogan, the chances of success of Larsen and Garlinghouse’s refusal moves are now pretty low, which is pretty bad for Ripple.
While it is unusual for the SEC to do this, the SEC sued two people, Larsen and Garlinghouse. There are three possible reasons for this, according to Hogan: First, they both make huge profits in their XRPs. Second, subjecting the defendants to a “stressful situation” can be seen as a simple tactic. Third, the SEC may have done this in an attempt to punish the founders, which could leave Ripple Labs a “backdoor” to let it go as a company.
One final, though not obvious, point is in paragraph 186 of the SEC’s writing: “Garlinghouse’s offers and sales took place on various digital asset trading platforms, including Platforms A and B and at least two others located in the United States. and one is established abroad, but its main business is in New York. ” As Hogan revealed, the SEC took up jurisdiction. However, Ripple can also use this for its own purposes:
“[…] And it leaves the court open for Ripple to tell the court that certain transactions may have an impact in the United States, that it has jurisdiction, but other transactions, and that the court cannot do anything with them. Ripple can throw this jurisdiction issue out, if it wants to. ”
Ripple’s general counsel, Stuart Alderoty, also commented on the altered claim statement via Twitter, criticizing the arrival of a change after years of waiting:
“As many of you have seen, the SEC filed an amended complaint today. One legal claim remains: Did certain distributions of XRP form an investment contract? The SEC had to try to “fix” their complaints after years of waiting to disappoint. ”
Finally, we will include the views of the lawyer Jesse Hynes for a different opinion. According to the famous lawyer, the current change has no effect on whether XRP is a security or not:
“The only purpose of these changes is to try to prevent Brad and Chris from filing a petition for refusal. It is important to note here that there are three defendants: Ripple, Brad, and Chris. Ripple gave an answer. Brad and Chris were not in any files. They have their own lawyers and legal teams. […] This proposal kicks Chris and Brad out of the case if they win. But Ripple is still on the case. As such, the SEC filed an amended complaint. Now Brad and Chris will reconsider whether they should submit the motion or just answer. ”