The U.S. Securities and Exchange Commission (SEC) case against fintech firm, Ripple, the creator of the native token XRP, has taken a new direction as Ripple has been granted access to Binance’s documents.
What you should know
- According to the case docket, the approval was made two days ago where U.S. Magistrate Judge Sarah Netburn granted Ripple CEO, Brad Garlinghouse’s motion to “obtain international discovery” of Binance records.
- As part of the case against Ripple for selling unregistered securities, the SEC also claims that Garlinghouse sold more than 357 million XRP tokens on cryptocurrency trading platforms to investors “all over the world.” As a result of these allegations, the legal team representing Garlinghouse requested documents “relevant to the case and unobtainable through other means” from Binance Holdings Limited on Monday, August 2, 2021, to help prove his innocence.
- The filing stated that the Ripple CEO sought foreign evidence based on his good faith belief that Binance possessed unique documents and information concerning the case. The records requested will show the XRP transactions that were allegedly conducted by Garlinghouse and may provide evidence that the Ripple executive made the transactions outside the jurisdiction of the U.S SEC.
- Ripple’s legal team cited Section Five of the 1933 Securities Act, stating the alleged illegal XRP sales applied only to domestic sales and securities offers. The lawyers stated that Garlinghouse’s sales of XRP were “overwhelmingly made on digital asset trading platforms outside of the United States” and are not subject to the law that the SEC has invoked.
Bottomline
In June, Brad Garlinghouse and Chris Larsen who was the former CEO of Ripple filed a twin motion to dismiss the SEC case by petitioning international authorities to request documents from several other non-U.S-based crypto exchanges including Bitstamp, Huobi and Upbit. These documents requested from these exchanges are expected to exonerate the pair from all charges.
Ripple also argues that the SEC cannot regulate XRP as a security because it is a medium of exchange used for international and domestic transactions. In mid-July Judge Sarah Netburn allowed the firm to depose William Hinman, a former SEC official who stated publicly that ETH was not a security.
The lawsuit started in December 2020 when the SEC filed against Ripple alleging that Garlinghouse and Larsen had been conducting an “unregistered, ongoing digital asset securities offering” with their XRP token sales. This caused the XRP token to nosedive by over 50% when the news broke as investors panic sold the cryptocurrency.
XRP has however recovered since then, trading nearly $2 at the peak of the bull run before the May 2021 crash. Native token XRP is up 2.15%, currently trading at $0.72 as of the time of writing this report.
