The Securities and Exchange Commission (SEC) should have examined the Perkins Coie memorandum and used Ripple as an example of proactive compliance, says Ripple General Counsel (GC) Stuart Alderoty. The memoranda to Ripple Labs Inc highlights the platform’s good faith in trying to issue digital tokens. The crypto company sought legal advice on other things too in an effort to be on the right side of the law.
The Ripple GC lashed out at the SEC for trying to use the memos as a sword. Alderoty believes the government agency should be lauding Ripple for doing the right thing. The GC said he finds SEC’s use of the memo as “incredibly offensive”.
In a filing, in February 2012, Perkins Coie told Ripple officials that selling tokens to investors to fund a crypto network in its initial launch plan would most likely to deemed a security by US authorities. As such, the crypto company shared a second revised plan. In a second memo, the law firm said there was a compelling argument that the planned tokens would not be subject to federal securities laws. But Perkins Coie warned that there was still some risk, albeit small whereby the SEC might regard the tokens as securities.
In December 2020, the SEC went on to file a lawsuit against Ripple for allegedly selling more than $1.3 billion in unregistered XRP between 2013 and 2020. The government agency has often cited Perkins Coie memos. The SEC claims Ripple was fully aware that the government may consider the sale of XRP to be an unregistered securities offering. The agency pointed out that despite this, Ripple went ahead with the sale.
However, the lawsuit hasn’t deterred Ripple from expanding. The platform continues to grow its payment system network and is moving into the broader market.