What defense will Ripple pursue against the SEC?
About 1 month ago , XRP, which was the third largest cryptocurrency by total market cap, fell to 5th place as of the writing of this article and is expected to drop to 6th place soon. Securities lawsuit filed against Ripple by the SEC broke all plans for XRP investors, and it is known whether the decline will continue according to the court's first hearing.
SEC To Use Howey Test Against Ripple
So how does Ripple Labs aim to defend itself and its CEO and co-founder with a total of 23 lawyers? In the case filed by the SEC , it is alleged that Ripple sold unlicensed securities and XRP was securities according to the Howey test. The SEC has used this claim against several small-scale ICO projects before and won all of the lawsuits.
The Howey test, which emerged as a result of a lawsuit won by the SEC in 1946, also forms the basis of Ripple's defense. SEC official Bill Hinman previously explained in a statement that precisely under what circumstances it treats an asset as a security. "If money is invested in a particular institution in anticipation of gaining from the efforts of others, this asset can be viewed as a security," Hinman explains.
What Is Ripple's XRP Defense?
Hinmani stated that during the ICO period, many investors invested in the expectation of gaining from the efforts of the project team, and these were directly considered securities. In addition, the purchase of the said asset not for use, but only for the expectation of earnings, leads to the status of securities.
Ripple, on the other hand, plans to make a very clear defense in this regard. In the post that Ripple published on the subject, it is emphasized that it is just a false assumption that XRP is an investment contract or a security.
MoneyGram Shares vs XRP Price Comparison
CEO Garlinghouse stressed that the SEC does not consider Bitcoin or Ether as securities and that XRP is no different. Ripple will use the eight-year price chart in addition to this, stating that "XRP is a currency" and that this is no different from BTC and ETH.
Increase chart of MoneyGram shares
The SEC claims that XRP is priced based on the direction of the Ripple company. Ripple will prove this wrong by showing its eight-year price chart. When MoneyGram and Ripple announced a partnership on June 19, 2019, MoneyGram shares had increased by 170%. XRP price was stable at that time. Ripple's main defense is based on this.