Ripple Vs SEC: Ripple Wins to Use Investment Banker Declarant

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1 The SEC’s case against Ripple is facing increasing challenges, and this latest ruling is a setback for the regulator.

2 The outcome of this case could have a major impact on the regulation of digital assets in the United States.

In a recent action in the ongoing legal fight between Ripple and the U.S. Securities and Exchange Commission (SEC), the court has given Ripple’s motion to accept a proficient declarant, an investment banker with over 30 years of experience in the financial industry.

The declarant, whose name is redacted in the court order, will deliver testimony on the market dynamics and practices of digital asset sales and offerings, as well as the expectations and understandings of participants in such transactions.

Ripple Vs SEC

It filed its motion on July 16, 2023, arguing that the declarant’s testimony is relevant and reliable, as it will help the court and the jury evaluate the economic realities of Ripple’s XRP transactions and whether they constitute investment contracts under the Howey test. Ripple also claimed that the declarant’s testimony will rebut some of the SEC’s allegations and factual assertions, such as the SEC’s claim that Ripple’s XRP sales were conducted in a manner similar to initial public offerings (IPOs) or initial coin offerings (ICOs).

The SEC had opposed Ripple’s motion, contending that the declarant’s testimony is irrelevant, unreliable, and prejudicial. The SEC argued that the declarant’s opinions are based on his personal views and experiences, rather than on objective data or analysis. The SEC also asserted that the declarant’s testimony will confuse and mislead the jury, as it will introduce irrelevant factors and considerations that are not a part of the Howey test.

However, Judge Analisa Torres rejected the SEC’s argument and granted Ripple’s motion, finding that the declarant’s testimony is relevant and reliable under the Federal Rules of Evidence. Judge Torres stated that the declarant’s testimony will assist the trier of fact in understanding the nature of Ripple’s XRP transactions and whether they involved an investment of money in a common enterprise with a reasonable expectation of profits derived from the efforts of others. Judge Torres also noted that the declarant’s testimony will not unduly prejudice or confuse the jury, as he will be subject to cross-examination and rebuttal by the SEC.

The court’s order is another win for the company in its defense against the SEC’s lawsuit, which accuses it of selling XRP in an unregistered security offering. The court had previously ruled that XRP is not security when sold to the public on an exchange, but it is when sold to institutional investors

The matter is scheduled for trial in January 2024. The outcome of this case may have significant implications for the crypto industry, as it may set a precedent for how digital assets are regulated and classified by securities laws.

Conclusion

The court’s order to allow Ripple to use an investment banker declarant is another win for the company in its defense against the SEC’s lawsuit. The declarant’s testimony is likely to be helpful to Ripple’s case, as it will provide the court with insights into the market dynamics and practices of digital asset sales and offerings. The outcome of this case is still uncertain, but the court’s order is a positive development for Ripple and the crypto industry as a whole.