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According to a post by Ripple‘s legal chief Stuart Alderoty, in 2020, the SEC asked Ripple to publicly admit that XRP is a security asset. The SEC requested a short-term permission from the company to ensure crypto compliance.
The Current State of the Ripple and SEC Disagreement
The content of the settlement offer from the Securities and Exchange Commission (SEC) was shared by Ripple’s legal chief Stuart Alderoty before the institution filed a lawsuit in December 2020.
Looking back on the third year of the lawsuit, Alderoty mentioned the proposal and settlement terms offered by the SEC before the lawsuit was filed. Three years ago today, Ripple disclosed that the SEC had proposed a settlement before initiating legal proceedings against Ripple, Chris Larsen, and Brad Garlinghouse. The proposal was as follows:
A short period for XRP to be declared a security to the public and to “comply with the market.”
On December 22, 2020, the SEC charged Christian Larsen, a co-founder of Ripple, and CEO Bradley Garlinghouse with conducting an unregistered digital asset securities offering and raising over $1.3 billion.
According to Alderoty’s post, in 2020, the SEC made an offer to the company and its officials. The offer made to Ripple was to publicly admit that XRP is a security asset.
In addition, a short-term request was made for the establishment of crypto compliance. After the offer, Ripple did not back down and rejected the SEC’s request by defending that XRP is not a security. Furthermore, Ripple argued that the SEC failed to create a regulatory framework for crypto compliance.
Aldetory’s Criticism of the SEC
Alderoty pointed out that the SEC has not provided clear rules for crypto compliance. Despite intense pressures in the industry and companies relocating, the SEC still has not been able to provide proper industry compliance three years after the XRP case. On the contrary, it continued its past actions by initiating legal proceedings against major crypto exchanges like Coinbase and Binance.
According to Alderoty, despite the different perspectives of Clayton, Hinman, Gensler, and others, the main focus of the case was consistently on XRP. He stated that the essence was to prove that XRP is not a security on its own.
While major US crypto institutions have expressed that existing securities laws are not suitable for crypto assets, the SEC continues to move slowly in creating a specific regulatory framework for crypto.
Despite this behavior, in recent months, Judge Analisa Torres dismissed the claim that XRP is a security in the hearings between the SEC and Ripple. Judge Analisa Torres decided in the summary judgment published in July 2023 that XRP cannot be considered a security in individual transactions.
