SEC Admits Failure in Informing XRP is a Security Until Lawsuit

Jafrin  |  Sep 11, 2021

The U.S. Securities and Exchange Commission (SEC) has officially admitted that it had failed to inform any inquiring third parties that XRP is security until the lawsuit was filed.

SEC Stayed Mum in Informing XRP is a Security

“Subject to all of the foregoing objections, the Commission admits that before the filing of this case certain third parties inquired about the legal status of XRP. However, the Commission did not state a view one way or the other in response.”

This comes out to be the most crucial information to date and could form the final grounds for the Ripple lawsuit by conceding that no fair notice was given. It could be advantageous for Ripple as its lawyers could insist that SEC had previously allowed its own employees to trade XRP before alleging that the token was an unregistered security.

In December 2020, the SEC filed a lawsuit against Ripple Labs claiming it illegally sold XRP as an unregistered security.

SEC's New Admission Contradicts With Former Director

SEC’s latest admission, however, contradicts with the former SEC director William Hinman’s previous testimony where he claimed on advising Ripple to stop selling XRP as it comes under the direct sales of security. With the agency’s latest admission, Hinman’s prior testimony is legally null and void.

Meanwhile, Hinman is already accused of corruption regarding his controversial 2018 speech that resulted in the price of Ether in 600% price rise, accusing him of planning the price surge based on evidence. Reportedly, Hinman consulted with the Ethereum Foundation officials and private market participants to invest in ETH before the speech.

XRP is back to trading above the $1 level after dipping below in the recent crypto market crash earlier this week. At the time of writing, XRP is trading at $1.06.

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