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Ripple, the distributed ledger company in the crosshairs of the U.S. Securities and Exchange Commission, announced Friday that it has filed its initial response to the agency’s lawsuit in federal court.

The SEC sued Ripple last month, claiming in its complaint that the company “raised funds, beginning in 2013, through the sale of digital assets known as XRP in an unregistered securities offering to investors in the U.S. and worldwide.” Market-facing firms across the crypto industry responded to the lawsuit by delisting or suspending trading of XRP, among other actions.

The response, filed Friday, asserts that the SEC’s lawsuit is premised on “an unprecedented and ill-conceived legal theory” 

“That theory ignores, among many other things, that XRP performs a number of functions that are distinct from the functions of “securities” as the law has understood that term for decades. For example, XRP functions as a medium of exchange — a virtual currency used today in international and domestic transactions — moving value between jurisdictions and facilitating transactions. It is not a security and the SEC has no authority to regulate it as one,” the firm wrote in the introduction of its 93-page response.

Concurrent with the court response, Ripple said that it has submitted a Freedom of Information Act request with the SEC, seeking information on several fronts, including any determination that Ether — the native cryptocurrency of the Ethereum network — is not a security, and “[l]etters regarding Chinese control of bitcoin and ether.”

In a statement outlining Friday’s actions, Ripple said that “[a]lthough the legal process is slow, we are working to get this resolved as quickly as possible to bring clarity to the broader market.”

“Moving quickly is important because, as you know, since the SEC filed its complaint, XRP lost almost half of its market value, causing retail holders of XRP with no connection to Ripple– the very people the SEC purports to protect – to suffer billions of dollars in losses. What’s more, part of the SEC’s mission is to maintain orderly markets… and yet their overreach created havoc in the market,” wrote Stu Alderoty, Ripple’s general counsel.

The full court response can be found below:

Ripple Answer Filed by MichaelPatrickMcSweeney on Scribd

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The Securities and Exchange Commission (SEC) may take a closer look firms like Robinhood and their actions amid a period of elevated activity around stocks like GameStop (GME).

In a new statement from the U.S. securities regulator regarding recent market volatility, commissioners said they would “closely review actions taken by regulated entities that may disadvantage investors or otherwise unduly inhibit their ability to trade certain securities.”

The SEC did not directly mention Robinhood in its statement, however, it alluded to the controversy surrounding the trading platform’s decision to block retail traders from further purchasing GME. GME has been on a tear in recent days, trading above $300 at press time on the back of activity boosted by traders who have congregated on Reddit and other social media services. Some of that activity has bled into the crypto sector, with the meme-theme cryptocurrency dogecoin shooting to new highs (it’s currently trading around $0.05 apiece.)

Robinhood blocked retail purchases of stocks like GameStop on Thursday, a move that came after days of eye-popping stock moves and reports of hedge funds with significant short positions on GME suffering significant losses and reaching out for reinvestments.

Critics called Robinhood’s decision to freeze retail buying on particular stocks a form of market manipulation that catered to hedge funds. Robinhood cited ongoing volatility and undue platform risks for its actions.

In its statement, the SEC reiterated that issuers must ensure compliance with securities laws for any sales or offerings, but cautioned all market participants to also follow the rules of the road.

“We will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws, said the statement. “Market participants should be careful to avoid such activity.”

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.