Ripple CEO Brad Garlinghouse, and executive chairman Chris Larsen plan to request the U.S. Securities and Exchange Commission’s charges against them be dismissed.
Each executive and their respective legal teams submitted separate letters to Judge Analisa Torres, who is presiding over the case, to outline the reasons they plan to file for motions to dismiss.
The SEC filed its lawsuit against Ripple in late December, declaring that XRP is a security and accusing the San Francisco payments company of selling the crypto asset without proper authorization.
The regulatory agency also filed suit against Garlinghouse and Larsen, claiming the executives played significant roles in negotiating and approving Ripple’s institutional sales. The SEC also says they adjusted sales targets depending on the price of XRP.
Garlinghouse’s lawyers say the SEC’s case represents “regulatory overreach, plain and simple.” The lawyers argue that XRP exhibits none of the traditional characteristics of an investment contract, and they note that the Department of Justice and the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) classified XRP to be a “virtual currency.”
They note that such a classification has required Ripple to continually adhere to anti-money laundering regulations that generally don’t apply to securities.
The lawyers also argue it’s inappropriate to charge Garlinghouse personally.
Larsen’s lawyers say there’s no basis for labeling XRP as a security, and argue the SEC has not shown any of Larsen’s XRP sales happened in the US.
“The SEC also fails to allege that Mr. Larsen’s XRP transactions were domestic and therefore within its jurisdiction…
Larsen’s XRP was offered and sold through a foreign market maker that sold his XRP ‘on digital asset trading platforms with worldwide operations and customers.’ And to the extent any part of the transactions occurred domestically, they still fall outside the SEC’s jurisdiction because they were ‘predominantly foreign.'”
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