Ripple has accused the Securities and Exchange Commission of distorting the facts about the status of its cryptocurrency XRP in its first formal response to a regulatory lawsuit filed in December.

In its action against Ripple Labs Inc. and two of its executives, the SEC alleged that they "raised over $1.3 billion through an unregistered, ongoing digital asset securities offering".

Since the SEC filed its complaint, XRP has lost almost half of its market value, as investors cashed out their holdings in favour of less contentious assets.

In its formal response, Ripple contends that XRP is a cryptocurrency and therefore outside the SEC's jurisdiction.

It points to recognition of XRP as a virtual currency by the UK’s FCA, and regulators in Singapore and Japan and argues that the SEC is asking the Court to contradict the findings of the agency’s peers in the US and worldwide.

It also claims that the SEC has distorted the facts to build its case, using cherry-picked quotes to draw conclusions that are "unsupported by both the facts and the law".

Andrew Ceresney, outside counsel to Ripple from law firm Debevoise & Plimpton, states: “The SEC’s case is unprecedented and ill-conceived. The SEC has ignored XRP’s clear status as a virtual currency, contradicting not only the findings of other U.S. regulatory agencies, but also international regulatory regimes. Over the last eight years, the XRP market, independent of Ripple’s activities, had grown to a massive scale- trading on over 200 exchanges worldwide. The SEC is now stretching the concept of an 'investment contract' beyond its breaking point. We look forward to presenting our case in Court.”