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New details emerged in the Ripple case with the SEC after the first session

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 New details emerged in the Ripple case with the SEC after the first session

On February 22nd, a preliminary hearing took place between representatives of SEC and Ripple.

The SEC remains adamant in its lawsuit against Ripple, with the SEC accusing Ripple and its key executives of violating securities laws by selling $ 1.3 billion in XRP.

The SEC also accused Mr. Garlinghouse and Larsen of intentionally manipulating the price of XRP by increasing and decreasing XRP sales according to market conditions.

What is new in the SEC lawsuit is that it has been modified into a modified complaint and, according to analysts, has become focused on manipulation by Ripple's managers rather than XRP as a digital currency or guarantee.

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The amended complaint states that, since 2013, "Garlinghouse" and "Larsen" have acted out of personal interest.

Excerpted from the text of the revised complaint:
Since at least 2013 until the present, the defendants have sold more than 14.6 billion units of digital units called "XRP" for money or any other consideration worth more than $ 1.38 billion, to finance and enrich Ripple operations.
 
The SEC letter also stated that Ripple was warned in 2012 by legal counsel that its XRP could represent a security offer.

The SEC is accusing Ripple executives of deliberately ignoring this advice and continuing to raise at least $ 1.38 billion after that.

The Securities and Exchange Commission also accuses Larsen and Garlinghouse of profiting from unregistered XRP sales of making $ 600 million each.

The committee adds that Garlinghouse has worked to create an information vacuum regarding financial transactions.

The SEC complaint also mentions an incident dating back to 2015, in which a market maker in Ripple, who was paid with XRP, temporarily suspended sales of Garlinghouse and Larsen, as the cryptocurrency was depreciating in the market.

The complaint accused Larsen of advising market participants to keep XRP sales paused for the time being until the market recovers.

From what was stated in the SEC filing with the court:
Ripple created an information void so that Ripple and the two insiders with the most control over it - Larsen and Garlinghouse - could sell XRP in a marketplace that only had the information the defendants chose to share about Ripple and XRP.

 Ripple's response:

In response to the allegations and the amended complaint, Ripple General Counsel Stuart Alderotti said that the complaint did not present any new arguments, and that there was only one legal question that had to be settled which was whether or not XRP would be considered a guarantee under the US investment laws.

Aldrotti tweeted:

As many of you have seen, the SEC filed an amended complaint.

The only legal claim remains: Are XRP distributions an investment contract?

To the disappointment of the SEC, it needed to try to "fix" their complaint after waiting years to file it in the first place ...


 Additional details about the hearing:

Ripple's preliminary hearing with the SEC on the XRP issue took place earlier this week.

According to attorney Jeremy Hogan who analyzed the trial session, Ripple's arguments are more solid, unlike those presented by the SEC.

What may turn the balance in favor of Ripple in this case is the timing in which the SEC has chosen to sue Ripple.

The SEC had plenty of time to do so beforehand, and was contacted by QueenBase in 2019 calling for clarity regarding XRP.

QueenBase wanted to make sure that XRP was not safe before it was listed for trading on the platform.

The Securities and Exchange Commission did not provide a clear response, which made the trading platform “Coinbase” conduct its own research and conclude that XRP was not a guarantee but a cryptocurrency and later included it for trading.

Hogan noted that it was a fatal mistake on the SEC's part to wait too long before pursuing Ripple in terms of XRP sales.
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