First Court Date Set For Lawsuit Against Ripple

A lawsuit filed by the Securities and Exchange Commission (SEC) against digital payments firm Ripple is heading to virtual court on Feb. 22, according to legal documents filed in the U.S. District Court of the Southern District of New York.

Legal counsel for those named in the suit — Ripple Labs, CEO Bradley Garlinghouse and Executive Chairman and Co-founder Christian Larsen — were called to appear in an online pretrial conference with Judge Analisa Torres. 

The order asks that the parties file a joint statement by Feb. 15 outlining the arguments and legal bases for the case, potential motions, and the likelihood of a settlement. 

Ripple said in a statement on Tuesday (Dec. 29) that the SEC’s lawsuit has already harmed “countless innocent XRP retail holders with no connection to Ripple” and have “needlessly muddied the waters” for the industry.

“The majority of our customers aren’t in the U.S. … There are clear rules of the road for using XRP in the U.K., Japan, Switzerland and Singapore,” the statement said. “… we will defend our company and look forward to settling this matter in court to finally get clarity for the U.S. crypto industry.”

The SEC complaint alleges that Ripple and two of its executives — Garlinghouse and Larsen — raised more than $1.3 billion in an unregistered securities offering of the digital coin XRP. The SEC considers XRP a security, however, and that is where the problem sits. Ripple maintains that XRP is electronic money. 

The legal status of XRP has been debated in and around the cryptocurrency landscape. Bitcoin and Ethereum are not considered to be securities because they’re decentralized and don’t have just one owner or company.

The SEC also said in the filing that an international law firm told Ripple that it wasn’t likely that XRP could be considered a currency because it’s not backed by a central government and therefore not legal tender.