There are 12 days left until the start of the first trial session between the US Securities and Exchange Commission (SEC) and Ripple.

Where the “SEC” body filed its legal complaint against Ripple for selling unregistered securities, and the “SEC” body accused Ripple of misleading and considering “XRP” a security and not an encrypted digital currency.

Stuart Alderoty, Ripple’s senior legal advisor, addressed several factors and considerations for addressing the complaint.

He told the general public that only the SEC side of the story is known at the moment.

Ripple officially addressed the complaint in a legal document called “The Answer,” which we previously discussed in a previous article on Arab Bitcoin.

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Ripple responds to the SEC and demands to know why Bitcoin and Ethereum are not considered securities?

Ripple lawyers provide some details about the SEC case against Ripple:

she answered Ripple responded to all the allegations of the Securities and Exchange Commission by submitting 93 pages, noting that XRP was not a guarantee contract, nor an investment contract or a security, as the authority called it.

Ripple’s legal team disputed the SEC’s accusation, stating that the company has never entered into a contract with any XRP holders or hosted an initial offer (ICO) for XRP.

Ripple’s lawyers explained that XRP coins were sold primarily on a decentralized network, and that XRP cryptocurrencies provide utility as a medium of exchange in international and domestic transactions.

Ripple’s lawyers explained:

The functionality of XRP is not fully compliant with SEC regulation.

The requirement to register XRP as a security and security currency is a dilution of the currency’s primary interest.

XRP token sales directly from Ripple:

Ripple’s lawyers pointed out the fact that Ripple’s monthly issuance of XRP from the escrow account constitutes a small portion of the XRP market, contrary to what the SEC complaint misleadingly indicated.

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The SEC previously hinted that XRP sales from Ripple CEOs as well as the monthly issuance of XRP tokens from escrow may have contributed to market manipulation and nullified the concept of decentralization.

Now, Ripple’s statement argues that this is all wrong, and the response reads:

The complaint misleadingly indicated that XRP sales constituted a significant portion of the XRP market, but that, in nearly all periods, these sales constituted less than 0.4% of the total volume of XRP transactions.

Finally, Ripple’s lawyers pointed out that the SEC did not provide fair advance notice that the XRP sales were in violation of securities laws.

Ripple said that in May 2015, the US Department of Justice and Financial Crime Action Network (FinCEN) had already agreed to define XRP as a convertible digital currency set up for sales and secondary market transactions.

The reply from Ripple is as follows:

The plaintiff (the Securities and Exchange Commission) learned of the 2015 settlement, and years later, the plaintiff did not provide the defendants (Ripple) any clear notice prior to the latest charges.

In the plaintiff’s view, potential XRP sales to the defendants as permitted by the agreement constitute a violation of other federal law.

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Ripple demands XRP to be treated as Bitcoin and Ethereum:

In addition to what was addressed above in Ripple’s response to the SEC, Ripple also filed a Freedom of Information Act request with the Securities and Exchange Commission, requesting documents from the agency explaining how Bitcoin and Ethereum were not classified as securities.

Ripple is likely to focus on why Ethereum was not considered a security by the SEC in 2018, despite the fact that Ethereum was launched through an initial coin offering (ICO) which gave investors an opportunity to buy the coin earlier than its official release.

As we indicated at the beginning of the article, the first part of the trial between the SEC and Ripple will take place on February 22nd.

The fate of the XRP price largely depends on the outcome of the lawsuit, as several cryptocurrency exchanges have moved to remove the coin, fearing possible penalties from the SEC.

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