Brad Garlinghouse and Chris Larsen, executives at San-Francisco-based payments startup, Ripple will file a motion to dismiss lawsuits brought against them and the company by the United States Securities and Exchange Commission (SEC).
The motion to dismiss will become the latest twist in the groundbreaking lawsuit which the SEC announced last December.
In separate letters directed to District Court Judge Analisa Torres who is presiding over the lawsuit, attorneys for the executives presented arguments to counter the SEC’s first amended complaint filed in January.
Ripple Kicks Against Fresh SEC Allegations
In the first amendment, the SEC in addition to earlier charges also accused Brad Garlinghouse and former Ripple Chairman, Chris Larsen of manipulating the market price of XRP.
The regulator specifically alleged they knowingly aiding and abetted illegal securities sales, including offloading personal XRP holdings to enrich themselves, while not making these known to market participants.
However, Brad Garlinghouse is kicking back on the SEC’s most recent allegations, labelling it as a form of “regulatory overreach.”
“The SEC has failed to allege that Mr. Garlinghouse’s sales and offers of XRP fall within
the territorial scope of the federal securities laws,” the letter announcing an intent to dismissed reads.
In the case of Chris Larsen, the letter states that the SEC’s amended complaint “still fails to state a claim against Mr. Larsen.”
While the SEC alleged that Garlinghouse and Larsen manipulated the price of XRP by selling their assets based on market conditions, the recent letter argues otherwise.
It states that “XRP’s value historically has not been correlated with Ripple’s actions, results, or public announcements, but instead with changes in the value of other digital assets, such as bitcoin and ether.”
Attorneys for Brad Garlinghouse and Larsen also noted other supposed ‘defects’ in the SEC’s amended lawsuit, arguing that they had pointed out these issues to the regulator while investigations were still ongoing.
Unless the SEC wishes to concede the case, which seems unlikely, the regulator will now have to respond to and refute the arguments raised by the defendants in a second amended complaint.
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Author: Wilfred Michael