Newly disclosed court papers in the legal battle between Ripple and the SEC reveal allegations that Ripple made payments ranging from $1 million to $5 million to six cryptocurrency exchanges to facilitate the listing of XRP. In response to these accusations, David Schwartz, Ripple’s Chief Technology Officer, has come forward to offer clarification and address the issue.
Payment Allegations
David Schwartz clarified in response to a thread by Scam Detective, an anonymous individual who claims to be a sleuth. A previously highlighted Exhibit 220 in the recently revealed court documents suggests that there are valid reasons to argue that XRP does not meet the criteria of the Howey test.
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After examining the situation, many supporters of Ripple concluded that if the document had been produced by the SEC, it would be a significant setback for the agency. However, a former SEC attorney named Marc Fagel clarified that the agency did not author the document. In their recent tweets, Scam Detective acknowledged this information but claimed that a law firm had prepared the document on behalf of Grayscale Investments.
Scam Detective pointed out that one of the arguments put forth by the law firm was that Ripple did not facilitate the trading of XRP in the secondary market. However, recent findings revealed that Ripple allegedly paid six exchanges amounts ranging from $1 million to $5 million in 2017 to ensure XRP was listed on their platforms.
According to Scam Detective, these allegations resulted in the termination of the Grayscale XRP Investment Trust in January 2021. The claims further suggest that Ripple had been persistently pursuing Coinbase for an extended period, aiming to secure the listing of XRP on their platform.
David Schwartz Reacts
Scam Detective’s findings suggest that the allegations of Ripple paying exchanges to list XRP had significant implications. One of these implications was the dissolution of the Grayscale XRP Investment Trust in January 2021. The trust, which allowed institutional investors to gain exposure to XRP, was reportedly impacted by the allegations, leading to its termination.
Furthermore, the allegations also shed light on Ripple’s purported efforts to secure a listing for XRP on Coinbase, one of the largest and most influential cryptocurrency exchanges. It is claimed that Ripple had been actively targeting Coinbase for several years, hoping to have XRP listed on their platform.
In a hypothetical scenario, Schwartz provided an explanation for the potential dynamics surrounding these allegations. He suggested that an exchange could demand a significant fee for listing XRP, which Ripple might initially choose not to pay.
Nevertheless, if Ripple recognizes a chance to form a valuable payment integration with that particular exchange, they might decide to make the payment for the integration costs. This would enable them to utilize the exchange for On-Demand Liquidity (ODL) purposes, which would require listing XRP on the platform.
However, it’s important to note that this payment would support Ripple’s broader objective of expanding its On-Demand Liquidity (ODL) service rather than solely being intended for XRP listing purposes.
Schwartz emphasized that the scenario he presented is purely hypothetical. He highlighted the tendency of litigating parties to present allegations in the most unfavourable manner without addressing the underlying facts. He urged caution in treating these allegations as definitive truths and emphasized the importance of conducting a fair and unbiased evaluation.
