The Ripple-SEC Case and XRPs Security Status

Jul 22, 2023 11:06 AM

Crypto, Crypto Ecosystem, Crypto Market, Crypto Regulations, Financial, XRP

The Ripple-SEC Case: Ripple’s XRP Declared Non-Security

Ripples from the landmark decision in the Ripple-SEC case are settling, but the crypto world is abuzz once again. Gary Gensler’s SEC team is considering an appeal against the ruling that unequivocally declared XRP as a non-security.

Main Breakdowns:

The Common Enterprise Conundrum
John Deaton’s Perspective
The Howey Test Hurdle
Parallel Paths or Conflicting Crossroads
The Impact on Cryptocurrency Regulation

The Common Enterprise Conundrum: The court determined that a common enterprise existed solely between Ripple and its institutional buyers. The extent of this connection to other XRP holders, Ripple’s top executives, and the broader XRP ecosystem remains unclear.

John Deaton’s Perspective: Influential cryptocurrency attorney John Deaton believes the SEC will struggle to prove a common enterprise connection beyond Ripple and secondary market XRP holders. He argues that the SEC’s case was convoluted and unconvincing.

The Howey Test Hurdle: The SEC claims that the Ripple ruling contradicts the core principles of securities laws, specifically the Howey Test, which determines if an arrangement qualifies as an investment contract.

Parallel Paths or Conflicting Crossroads: The SEC asserts that certain aspects of the Ripple ruling support their allegations in a separate case against Terraform Labs. They argue that the Ripple ruling imposes unfounded requirements on the Howey Test, creating a conflict.

The Impact on Cryptocurrency Regulation: The outcome of this situation remains uncertain and will impact the complex intersection of traditional securities law and cryptocurrency regulation.

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Hot Take:

The Ripple-SEC case has created significant uncertainty within the cryptocurrency industry. While Ripple’s XRP has been declared a non-security, the possibility of an appeal by the SEC raises questions about the future of regulation in the crypto space. The outcome of this case will undoubtedly shape the evolving landscape of cryptocurrency and its relationship with traditional securities law.