The US Securities and Exchange Commission’s (SEC) case against Ripple and its cryptocurrency, XRP, is still ongoing. However, things are taking an unexpected turn that might be in the company’s favor. Specifically, Ripple CEO, Brad Garlinghouse, recently requested from the court to access Binance’s records, in hopes that they will show that the company acted outside of the SEC’s jurisdictions.
The SEC’s case against Ripple is still ongoing
The SEC’s case against Ripple continues to evade resolution. It started late in 2020, when the SEC, after spending years of tackling countless ICOs from 2017, finally turned its gaze towards Ripple and numerous accusations that the company’s coin is unregistered security. The SEC then came to the same conclusion, filing a lawsuit against Ripple based on the same accusation.
The move has had a major impact on Ripple and XRP alike. The company lost some highly valued partners, such as MoneyGram, while XRP lost its position as the third-largest cryptocurrency, which it claimed for years, occasionally even exceeding it to claim the second spot from Ethereum.
However, Ripple and XRP quickly found their footing in Europe and East Asia, where numerous countries confirmed that they don’t share the SEC’s view, allowing XRP to be traded, and Ripple to team up with their banks and firms.
Meanwhile, in the US, the case still remains open, although this might not be the case for long. According to Ripple CEO, Brad Garlinghouse, there might be evidence that he and the company acted outside of the SEC’s jurisdiction, and to prove this, he requested access to Binance’s documentation and records. The request was made by the legal team representing Garlinghouse under the claim that the records are relevant to the case, and unobtainable through other means.
The US Magistrate Judge Sarah Netburn granted the motion on the 3rd of August, and so now, Ripple has permission to ‘obtain international discovery’ from Binance Holdings Limited.
Ripple found a way to prove that it did not violate US securities laws
According to the lawsuit against Ripple, the SEC claims that Garlingouse sold over 357 million XRP tokens to investors all over the world by using crypto trading platforms. But, according to Ripple CEO, he is now seeking foreign discovery on the basis of his good faith belief that Binance was in possession of unique documentation and information regarding the case.
The records in question allegedly concern XRP transactions, that Garlinghouse conducted, and that may provide evidence that the CEO acted outside of the US SEC’s jurisdiction. If Binance’s documents can prove this, Garlinghouse hopes to be considered not guilty of the accusations, as Section Five of the 1933 Securities Act indicates that the illegal XRP sale would only be illegal if conducted in areas where the SEC has authority, meaning, domestic sales and securities offers.
But, if Garlinghouse can prove that his XRP sales were mostly made on overseas crypto trading platforms, then these activities are not subject to the law that the SEC has invoked, and essentially, it would be out of the regulator’s hands. Of course, Garlinghouse would still be in trouble with the regulators from the regions in which he did make the sales, provided that they shared the SEC’s view of XRP as an unregistered security, which most do not.
Earlier this year, in June, Garlinghouse and Larsen also filed a motion petitioning international authorities to request documents from a number of other foreign exchanges, such as Huobi, Bitstamp, and Upbit.
Furthermore, Garlinghouse’s fintech startup also claims that the US SEC cannot regulate XRP as a security. The reason they offered is the alleged fact that XRP is a medium of exchange, used for international and domestic transactions.
For the moment, it is unknown whether or not Ripple’s efforts will lead to the resolution of the case, or even if they will have an impact at all. A lot of it depends on the records that Binance is now obligated to provide, and the case could go either way from here.