Ripple CEO’s motion to dismiss ‘not based on sound legal theory,’ claims SEC
The United States Securities and Exchange Commission has responded to Ripple CEO Brad Garlinghouse’s latest letter to the court, a letter in which the exec claimed that the lawsuit is “regulatory overreach on behalf of the SEC.”
According to the SEC’s trial lawyer Jorge G. Tenreiro, Garlinghouse’s motion to dismiss the charges against him is not based on any sound legal theory. In a competing letter to Judge Torres, he argued,
“Garlinghouse plans to use the motion to air his grievances against the SEC, an effort that will waste considerable litigant and judicial time and resources.”
The regulatory agency remains firm in its contention that Garlinghouse aided and abetted the violation of the Securities Act of 1933, with Tenreiro going on to assert that the defendant’s letter failed to dispute two critical facts expanded upon in the SEC’s complaint.
The first being that Ripple’s CEO profited by more than $150 million from illegal sales of XRP, and the second being that he was consciously aware that XRP could be found to be a security.
According to the SEC, Garlinghouse knew that XRP was under SEC scrutiny and took a risk as to whether the SEC would file an enforcement action seeking to hold him accountable.
“Having lost that gamble, Garlinghouse now seeks to blame the SEC for his own misconduct,” the letter added.
The lawsuit was first announced by the SEC on 22 December 2020 under the regime of SEC Chairman Jay Clayton. While official litigation only just began in February 2021, some, including former SEC Commissioner Paul Atkins, have speculated that the newly confirmed SEC Chairman might withdraw the lawsuit against Ripple when he assumes office.
Here, it should be highlighted that a few weeks after the lawsuit was filed, SEC Commissioner Hester Peirce, while evading any mention of Ripple or XRP, commented that enforcement isn’t necessarily the best course of action to provide legal guidance.