The legal counsel of Chris Larsen, Ripple’s Executive Chairman, is trying to remove Larsen’s name from the Securities and Exchange Commission’s lawsuit against Ripple over the sale of XRP, which the regulator alleges to be an unregistered security.
In a letter to Judge Analisa Torres at the US District Court for the Southern District of New York on Wednesday, the legal representative filed a motion to dismiss charges against Larsen, questioning the merits of the SEC’s allegations.
The US regulator moved against Ripple and its two executives Brad Garlingohouse and Chris Larsen for raising $1.3 billion by selling XRP, which, according to the lawsuit, falls under the category of unregistered securities.
No Solid Evidence
“Defendants believe that the SEC will be unable to demonstrate that transactions in XRP constitute securities because, among other reasons, they possess none of the attributes of ‘investment contracts’,” the letter stated.
The legal mind is trying to squash the regulator’s central claim that Larsen ‘knowingly or recklessly provided substantial assistance to another person’ to violate the US Securities Act by selling the unregistered securities.
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The letter stressed that the SEC failed to establish Larsen’s knowledge of XRP being a security while selling them. It highlighted that recognition of the Department of Justice and the FinCEN of XRP being a virtual currency and also highlighted the SEC’s previous description of Ripple as a ‘digital currency company’.
“At a minimum, the SEC must allege that it was ‘so obvious’ that XRP transactions were securities and Ripple’s conduct was improper that Mr. Larsen ‘must have been aware of it’,” the letter added.
In addition, it questioned the US regulator’s jurisdictional authority as the allegations failed to establish that the XRP tokens were sold within the United States.
“In the face of these undisputed facts, which affirmatively establish the absence of knowledge or recklessness, the SEC offers only conclusory and legally insufficient allegations that Mr. Larsen knew or recklessly disregarded that Ripple’s conduct was in any way improper,” the legal counsel noted.