Ripple Labs, Inc., faced off against the Securities and Exchange Commission (SEC) in their pre-trial hearing last week, prompting the company raise several questions about the behavior of the SEC during their investigation.
During the pre-trial hearing, Ripple accused the SEC of using the U.S. government’s power to gain unfair advantage.
In particular, Ripple accused the SEC of purposely misleading the company’s business partners by sending formal requests to foreign regulators to get information to help their case.
Ripple further accused the SEC of working outside the Rules of Federal Procedure. This prompted the Ripple lawyers to inquire about whether or not the Memorandum of Understanding between the US government and their foreign counterparts was mandatory or voluntary.
The SEC responded to Ripple’s question by stating that the Memorandum of Understanding was not compulsory, while the latter responded by accusing the former of using the “weight and power of the US government.”
Judge Sarah Netburn, who is currently presiding over the pre-trial hearing, said that “my understanding is that although the foreign company must comply with the request by its government, the foreign government does not have to comply with the SEC’s request.”
Despite Netburn’s comments, she did not issue a ruling in this pre-trial hearing, which will now extend for another week.
Once the pre-trial hearing has concluded, the two parties will begin the primary proceeding of the $1.3 billion lawsuit.
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However, while the case not been settled, Ripple CEO has expressed confidence about the suit, saying that he feels “really good” about its future outcome.
According to Inside Bitcoins, Garlinghouse told Fox News he is feeling confidant about his company’s significant breakthrough in its legal battle again the SEC, while denying harassment of the commission.
In December of 2020, the SEC filed a lawsuit against Ripple, accusing them of selling their XRP tokens, which they said were not a financial security.
Ripple executives were accused of making millions of dollars off of their coin, XRP, while failing to prove that it has any practical use other than making them money.
The lawsuit said Garlinghouse and co-founder of Ripple, Chris Larsen, sold approximately $1.3 billion worth of XRP, which resulted in several cryptocurrency exchanges removing the token from their platforms.
As a result of this lawsuit, XRP’s price plummeted toward the start of the new year; however, since then, the cryptocurrency has managed to recover and more than triple in price in the month of April alone.