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XRP’s Moment of Truth: Ripple v. SEC Update Sparks Controversy and Market Volatility

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  • Ripple’s CTO, David Schwartz, critiques the SEC’s shifting language in its latest legal discourse.
  • Notable lawyer Bill Morgan brings to light inconsistencies in Judge Torres’s decision, sparking discussions around Ripple’s XRP and its comparison to the Howey test.

Delving into the Ripple vs. SEC Saga

As anticipation continues to rise regarding the pending judgment in the faceoff between blockchain pioneer Ripple and the United States Securities and Exchange Commission (SEC), industry insiders and observers are delving deeper into the case’s subtleties. Notably, the discourse surrounding Judge Analisa Torres’s summary judgment is at the heart of the debate.

David Schwartz, Ripple’s CTO, didn’t shy away from joining the conversation, challenging the SEC’s recent linguistic pivot—a nuance earlier spotted by legal expert Bill Morgan. Schwartz expressed his perplexity at the SEC’s transition from referencing “selling digital asset securities” to now using the term “crypto assets offered and sold as securities.” This change was observed in a settlement involving cryptocurrency exchange Bittrex and its leading figure, William Shihara.

XRP and the Legacy of Howey’s Orange Groves

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Schwartz’s discourse is rooted in the analogy between Ripple’s XRP and the iconic Howey’s orange groves. He draws parallels between the two, underscoring that while the real estate brokers in the Howey case did offer and sell orange groves as securities, the same groves could legally be sold in straightforward asset sales.

Expounding on this, Schwartz elucidated that merely selling an item as a security doesn’t inherently render it as one. Using the Howey case as a backdrop, he emphasized that the heart of the issue wasn’t the reselling of the orange groves (or “Howey trees” as commonly referred to) but rather “transferring contractual rights and obligations.”

Bill Morgan, offering another layer to the ongoing dialogue, scrutinized Judge Torres’s decision where she bundled sales to on-demand liquidity (ODL) customers alongside other institutional sales. Morgan’s contention arises from the perceived lack of clarity in the Judge’s decision, especially regarding why these sales were categorized as investment contracts.

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Highlighting potential inconsistencies, Morgan queried the nature of the promise of shared profits and the inherent investment promise to these ODL users, particularly when many allegedly sold or exchanged their XRP within mere seconds.

To add another dimension, a collective of six securities law scholars recently filed an amicus brief in support of Coinbase against the SEC. Their stance, if validated, could challenge the validity of the findings against Ripple in Torres’s ruling.

Amidst this legal maelstrom, XRP’s value showcases its resilience. As of recent data, the cryptocurrency stands at $0.626, marking a slight dip on the day but an overall weekly gain, despite facing challenges over the past month.

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Jack Williams
Jack Williams
As a Blockchain Analyst, I specialize in analyzing the performance of decentralized systems and optimizing their efficiency. Through data analysis, I provide insights on blockchain technology, smart contracts, and cryptocurrencies to help businesses make informed decisions and improve their operations.
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