According t0, Ripple Labs Inc was warned by their own lawyers about their sale regarding the sale of XPR digital tokens. It will become a huge issue under federal security, and as a result, it will trigger various problems.
U.S Securities and Exchange Commission accuses Ripple Labs
There are numerous reports that claim that the U.S Securities and Exchange Commission has been searching for data for the unregistered offering. There are reports that the company has $1.3 billion in XRP. This happened between 2013 to 2020. Ripple Labs took special advice from a law firm in the year 2012. The law firm still remains unidentified, but there is confirmation of the fact that the law firm sent two memos to the company analyzing different issues that might arise due to the special launch.
The company and the government offered widely divergent accounts.
The two memos were kept under a seal, and it completely disclosed the errors made by the company. The special SEC contends that are present in the document clearly shows that the then CEO, Christian Larsen was completely aware of the fact XRP will do to the company. He knew that XRP would come under the so-called security under federal law. On the other hand, the Ripple Chairman, Ripple, and Larsen said that people are misusing the memos. The facts in the document clearly state that Ripple’s lawyers were informed of the fact that the token won’t act as securities.
The memo is going to play a key role in the entire case, and it will definitely be a tough case for the SEC in order to regulate cryptocurrencies. Different enforcement actions that are responsible for checking cryptocurrency regulation will be challenged with the memo.
Ripple or Larsen wanted to keep the memo a secret
According to sources, Ripple or Larsen wanted to put a seal on the memo. They further told the judge that those memos represent an important part of internal business strategies, and hence they must be kept secret.