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Ripple, the company behind the XRP cryptocurrency, has recently won a legal battle against the US Securities and Exchange Commission (SEC) regarding the classification of XRP as a security.
The dispute ignited a heated discussion on X account between Stuart Alderoty, Ripple’s Chief Legal Officer, and Miles Jennings, General Counsel and Head of Decentralization at a16z. Their disagreement centered around whether XRP should be considered an investment contract or not.
To those saying the SEC doesn’t think a token itself is a security… this is false. See the SEC’s own words in the complaint against us (which the Judge ultimately rejected) pic.twitter.com/RIoAbs1pM5
— Stuart Alderoty (@s_alderoty) August 5, 2023
Alderoty argued that despite the SEC referring to XRP as an investment contract in their complaint against Ripple, the judge overseeing the case dismissed this assertion due to weak supporting evidence from the SEC.
In response, Jennings highlighted that the complaint itself used language like “during the Offering” to imply that XRP was categorized as an investment contract during that particular period. This exchange of arguments fueled tensions between both legal professionals.
Ripple Defends Its Position Against SEC’s “Embodiment Theory”
Alderoty defended XRP’s position by arguing that the term “Offering” encompassed the period from 2013 to 2020. He strongly criticized the SEC’s “embodiment theory,” which contended that XRP itself constituted the investment contract—a viewpoint Ripple vehemently disagreed with SEC.
However, the dispute took a personal turn when Alderoty accused Jennings of attempting to rewrite history and reminded him of his previous prediction that XRP would not succeed against the SEC. While Jennings acknowledged his mistake in the prediction, he questioned Alderoty’s integrity.
CCI, also known as the Crypto Council for Innovation, is an industry group consisting of a16z, Coinbase, Square, and Fidelity. In December 2022, the group filed an amicus brief to support Ripple and argued that XRP should not be classified as a security.
The SEC filed a lawsuit against Ripple in December 2020. The lawsuit claims that XRP and its executives raised over $1.3 billion through an unregistered securities offering of XRP. This case has garnered significant attention within the crypto community as it could shape future regulations for digital assets in the USA.
Ripple maintains that XRP should not be classified as a security but rather as a currency or commodity, exempt from SEC’s oversight. Furthermore, the company accuses the SEC of contributing to confusion and uncertainty within the crypto market.
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