The pretrial of the lawsuit against Ripple by the Securities and Exchange Commission (SEC) is set for Feb. 22, 2021, according to a court document in the United States District Court of the Southern District of New York.
The counsel representing both parties will lead the telephone pretrial concerns ahead of the preliminary hearing, to do “(1) a brief description of the case, including the factual and legal basis for the claim(s) and defense(s), (2) any contemplated motions and (3) the prospect for settlement.”
Earlier this month, the SEC sued Ripple for allegedly violating federal securities laws by conducting an unregistered initial coin offering (ICO). The regulator alleged that the cryptocurrency company, ts co-founder Christian Larsen, and CEO Bradley Garlinghouse raised more than $1.38 billion by illegally selling over 14.6 billion units of XRP. The SEC considers XRP as “digital asset security.”
Coinbase, the popular cryptocurrency exchange platform reacted to the lawsuit by limiting the XRP trading and will suspend it for good on January 19, 2021. This has resulted in a 65% decrease in the XRP price.
A majority of Ripple customers are based overseas
Meanwhile, Ripple CEO Garlinghouse stated that only 5% of the company’s clients are located in the United States. The company is willing to relocate soon as a response to the lawsuit by the SEC.
In an interview with CNN, Garlinghouse said, “95% of our customers are non-U.S. and only about 5% are here in the U.S. People say ‘You are a U.S. company, […] why is that?’ One of the dynamics is that U.S. companies are waiting for clarity, and that clarity emanates from the Securities and Exchange Commission.”
“For us, around XRP and over 100 companies that are working with XRP getting that clarity, it’s very clear to me that XRP is being used by many companies as a currency. You had the U.S. Department of Justice refer to XRP as a currency, you had FinCEN refer to XRP as a currency. But you haven’t yet had that clarity from the SEC” he added.
Ripple in talks with SBI Holdings regarding its plan to move to Japan
Ripple is planning to relocate its business to Japan. Garlinghouse said that he is in talks with SBI Holdings, one of the biggest financial firms in Japan, regarding the plan,
“Japan is one of our fastest-growing markets, in part because we have key partners like SBI,” says Garlinghouse.
In Japan, XRP “is widely traded in cryptocurrency exchanges” and the Japanese government does not consider it as a security, according to Sadakazu Osaki, an analyst at Nomura Research Institute.
It can be said that the interpretation that it does not fall under ‘securities’ under the Financial Instruments and Exchange Act, which requires the submission of a document, has been established. This point will not be affected by the proceedings between the SEC and Ripple,” wrote Osaki in a report.
SBI Holdings CEO Yoshitaka Kitao stated that Ripple should leave the United States and relocate to Japan so it can survive.
Ripple’s move comes in conjunction with what Brad Garlinghouse called “regulation through enforcement” policy imposed by the SEC.
Ben Zhou, the CEO of cryptocurrency exchange ByBit told Cointelegraph, the “SEC and Ripple will have their day in court with due process of law, so we shall not prejudge the case in the court of public opinion. It is of course likely that the case will take up much of Ripple’s attention and resources. […] We hope a clear precedent and framework emerge from these proceedings.”
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