Legal Expert Challenges SEC on XRP Token Securities Status

Legal Expert Challenges SEC on XRP Token Securities Status


Lawyer and digital asset enthusiast, Bill Morgan, argues that the Securities and Exchange Commission’s (SEC) attempts to categorize all XRP tokens as investment contracts face a significant hurdle when considering a “small subset” of sales made to On-Demand Liquidity (ODL) customers.

In a recent series of tweets, Bill Morgan, a digital investment enthusiast, and lawyer, expressed his concerns about the Securities and Exchange Commission’s (SEC) stance on Ripple’s XRP Ripple (XRP) sales. Morgan argues that the SEC’s attempts to categorize all XRP Ripple (XRP) crypto tokens as financing contracts face a whole lot of hurdle when seeing as a “small subset” of sales made to On-Demand Liquidity (ODL) customers.

XRP Ripple (XRP) fails to qualify as a security

“They just do not appear to fit any part of the Howey test. No investment. Even the SEC alleges they are dealt with by ODL customers immediately. No expectation of profit because they are being used as a bridge, not held. No common enterprise.” 

Morgan outlines that the sales to ODL customers do not seem to meet the criteria set by the Howey test, a judicial system used to determine whether an financing qualifies as a security. He notes that that these sales do not involve financing intentions, as ODL customers use XRP Ripple (XRP) as a bridge currency and promptly transform it. In addition, there is no common enterprise, as ODL users are merely customers utilizing a product.

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This poses a challenge for the SEC, as seeing as these sales as exceptions would undermine their argument that all XRP Ripple (XRP) is a security or represents an financing contract. The notion that XRP Ripple (XRP) itself is security collapses, as all XRP Ripple (XRP) crypto tokens are fungible.

Likewise Read: Secret Ripple-SEC Discussions Exposed: Will XRP Ripple (XRP) Lawsuit Take A U-Turn? – Coinpedia Fintech News

Morgan’s Arguments

Morgan notes that two other exceptions that challenge the SEC’s argument: the giveaways of XRP Ripple (XRP) to early adopters and developers, likewise as donations to charities. The SEC has made no states regarding these transactions, indicating that those XRP Ripple (XRP) crypto tokens were not considered financing contracts.

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Nonetheless, the SEC’s assertion that all XRP Ripple (XRP) crypto tokens are fungible establish a predicament. As Morgan describes, if some XRP Ripple (XRP) crypto tokens given away, gifted, or sold to ODL customers are not financing contracts or securities, then it logically comes after that all other XRP Ripple (XRP) crypto tokens, which are fungible with them, cannot be considered securities either.

Morgan Divulges His XRP Ripple (XRP) Holdings

In a separate tweet, Morgan makes it clear that the XRP Ripple (XRP) he owns were some of those at the beginning given to early adopters or gifted to charities, which the SEC does not allege as financing contracts. He claims that his XRP Ripple (XRP) holdings, although fungible with other XRP Ripple (XRP) crypto tokens, are unequivocally not securities, attributing his ownership to fortunate circumstances.

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