SEC refuses to explain ‘Howey Test,’ the law it used to f*** Ripple Labs

"Ripple XRP" by BeatingBetting (licensed under CC BY 2.0)
“Ripple XRP” by BeatingBetting (licensed under CC BY 2.0)

Key Takeaways:

  • The SEC filed an opposition to Ripple’s Motion to compel interrogatory responses regarding SEC’s Howey Test theory.
  • Meanwhile, XRP slumped 20.8% in between September 7 to September 8.

NEW DELHI ( — The Ripple-SEC lawsuit seems to have taken the shape of a turn-based game, with each turn bringing in new motions. The latest move comes from the SEC camp as the regulator filed an opposition to the defendant’s Motion to compel interrogatory responses to clarify SEC’s Howey Test application theory.

The Howey test identifies whether certain transactions qualify as investment contracts and are thus subject to U.S Securities law. As such, Ripple wants to determine the SEC’s theory to determine how the Howey test applies to all of Defendant’s XRP transactions over the last eight years.

Meanwhile, as Bitcoin crashed after El Salvador’s glitched launch, XRP prices fell too. The Ripple token fell 33.4% from September 7’s high of $1.39 to the day’s low of $0.93. The decline continued on Wednesday as well.

SEC’s Response To Motion To Compel

In a letter to Judge Sarah Netburn, Mark Sylvester, senior trial counsel at the SEC, requested the court not compel the regulator to answer Ripple’s contention interrogatories. Additionally, the SEC accused Ripple of trying to ‘trap’ it into answering questions regarding the legal status of Bitcoin and Ethereum.

The SEC also stated that it has already answered Ripple’s interrogatories ‘substantively.’. As such, the regulator also highlighted that Ripple’s arguments boil down to a complaint ‘that they do not like the answers they received to the interrogatories at issue.’.

Also Read: SEC doubles down on crypto exchanges. Is Coinbase next?

The SEC’s opposition letter asserts that Ripple delayed its response regarding the plaintiff’s Interrogatories’ answers. In addition, the regulator claims that Ripple intentionally halted its reply until the end of the fact discovery deadline. The SEC also highlighted that they had met and conferred with Ripple regarding five of the issues’ responses.

The SEC requested Ripple to highlight specific information that the fintech firm needed from the SEC. However, as per the regulator, the Defendants refused and filed a motion to compel less than three hours before the fact discovery deadline.

The U.S. regulator further claimed that Ripple merely referred the SEC to its document requests for some of its interrogatories instead of identifying documents that answered the questions. Furthermore, the SEC also objected to Ripple’s repeated use of the Court’s Phillies decision as grounds for limiting its obligation to respond to the SEC’s interrogatories.

In Phillies, […] the Court stated:“courts generally resist efforts to use contention interrogatories as a vehicle to obtain every fact and piece of evidence a party may wish to offer concerning a given issue at trial.”

SEC in its letter

Moreover, the SEC itself is using the same decision to support its arguments.

Ripple Price Charts

Bitcoin’s crash affected the crypto market on the whole, and XRP suffered as well. The Ripple token began a bull run following a golden cross on the daily charts. When a short-term moving average trendline crosses above its long-term MA line, it forms a golden cross. However, Tuesday’s flash crash stopped XRP’s bull run in its tracks.

Ripple, SEC refuses to explain ‘Howey Test,’ the law it used to f*** Ripple Labs
Ripple prices went into a free fall on September 7. Source: XRPUSD on

XRP’s 26-Day (Green) Exponential Moving Average now acts as a dynamic resistance. However, the ripple token is bullish, as its prices trade above the 50-Day (Yellow) and 200-Day (Red) MA trendlines. If the XRP’s fall continues, it will find support near $1.05.

Also Read: Bitcoin (BTC) falls below $43,000 following El Salvador’s adoption.

Further support for XRP is at $0.990 near the 50-Day MA line, followed by approval at $0.901 near the Ripple token’s 200-Day MA. In case of an uptrend, bulls will target resistance at $1.19. If they breach it, the next target will be $1.289. Finally, if the uptrend sustains, the resistance at $1.39 will come into play.

Meanwhile, trend-based momentum oscillator MACD turned bearish for XRP, as the MACD line (difference of 12-Day and 26-Day EMA) moved below its signal line (9-Day EMA of MACD).

Ripple, SEC refuses to explain ‘Howey Test,’ the law it used to f*** Ripple Labs
Ripple’s MACD turned bearish on September 7. Source: XRPUSD on

Bars on the MACD histogram, which plot the difference between the MACD line and the MACD signal line, turned negative.

The relative strength index for XRP is neutral, with a value of 48.06. In a positive for the bulls, XRP started moving upwards on September 9.

At the time of writing, XRP was trading at $1.115, up 1.45% on the day.

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Ripple, SEC refuses to explain ‘Howey Test,’ the law it used to f*** Ripple Labs

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