Ripple: Exchanges Checked XRP Status With SEC Before Listing

XRP market participants, including crypto trading platforms, discussed the cryptocurrency’s regulatory status with the U.S. Securities and Exchange Commission (SEC) prior to listing the asset, Ripple said in a new filing Thursday night.

The payments and remittances startup closely associated with the XRP cryptocurrency filed its response to an amended SEC complaint alleging Ripple violated federal securities laws. Ripple continued to deny each of the SEC’s claims in a paragraph-by-paragraph rebuttal reminiscent of the tactic messaging platform Kik used when it faced the SEC two years ago. 

Much of the response resembled Ripple’s first answer, filed at the end of January, to the SEC’s original complaint, which the regulator brought at the end of 2020. The SEC filed an amended complaint in mid-February, 

As it had in January, Ripple said it reserved the right to file a motion to dismiss the complaint at a future point. 

In its new response, the San Francisco-based startup continued to argue that XRP is not a security and that it had not violated federal law in selling XRP over the past eight years. Many of the new additions to the response addressed statements the SEC added about documents the regulator believes support its case that Ripple should have known its sales may have been securities transactions.

The new response also leaned more heavily on claims that crypto trading platforms discussed whether to list XRP with the SEC in previous years. One unnamed company, referred to as “Platform A,” reportedly “evaluated XRP’s regulatory status in light of prior SEC guidance and actions.”

“Platform A met with SEC staff in the Division of Corporation Finance and Division of Trading and Markets, including at least one senior SEC staff member who previously met with Ripple on multiple occasions during investigation-related meetings in 2018, about the legal status of XRP and sought guidance on whether the SEC staff considered XRP a security,” the response said. 

While Ripple did not name the platform, Coinbase is perhaps the most prominent U.S.-based crypto exchange that listed XRP in early 2019.

Ripple said the unnamed platform was not told the SEC considered XRP to be a security, and listed the asset after that conversation. 

Coinbase has since suspended trading due to the ongoing SEC suit, alongside numerous other exchanges operating in the U.S. Ripple claimed that has cost XRP holders roughly $15 billion during the past few months.

The price of XRP plunged dramatically after the suit was first announced by Ripple, dropping from near 60 cents to around 27 cents. It has since breached the 60 cent level again, and was trading closer to 45 cents at press time.

Ripple CEO Brad Garlinghouse and Chairman Chris Larsen are both named as defendants, and in a pair of letters dated March 3, both told District Judge Analisa Torres of the Southern District of New York that they may file to dismiss the charges against them as individuals.