The legal battle between the United States Securities and Exchange Commission [SEC] and Ripple Labs is unlikely to end anytime soon. The two parties have relentlessly filed opposing motions to dispel claims made by the other, along with trying to acquire “relevant information.”
Ripple[1] has now filed a motion[2] to compel the SEC to answer interrogatories identifying the SEC’s theory of how the Howey Test applies to virtually all of Ripple’s transactions in XRP over the last 8 years. Even after repeated insistence by Judge Netburn, the SEC has repeatedly refused to provide relevant information on how Howey applies to Ripple’s transactions, calling it “baseless.”
In the filing, the defendants claimed,
“The SEC adheres to its position that the contentions sought are irrelevant, and refuses to provide substantive, non-evasive responses”
The Howey test is the basis on which the SEC decides whether an investment is a security. The key factors include money or assets being invested into a common enterprise or company by investors who expect a profit. Moreover, these profits have to come from the efforts of the promoter and the investors shall have no control over it.
The SEC claims that Ripple sold over $1.3 billion in unregistered securities to clueless investors through their token XRP.
Does SEC’s Howey application hold true?
In the said motion, the defendants now seek representations from the SEC about how Howey applies to this case along with factual support for this argument. According to the defendants, this is “absolutely basic information essential to the defense.”
The filing also detailed the specific information sought by Ripple through interrogatories. The first pertains to information on how there was an “expectation of profits” on the part of the purchaser of XRP. Stating that the SEC has repeatedly refused to provide
