More than two years have passed since the U.S Securities and Exchange Commission (SEC) sued San Francisco-based blockchain payments firm Ripple, throwing many XRP holders into chaos.
But could a breakthrough for Ripple finally be on the horizon?
U.S. Attorney John Deaton has shared more reasons why he thinks the SEC faces a bruising defeat against Ripple.
SEC Accusations Are Stretched Too Far
CryptoLaw founder John Deaton has criticized observers predicting that the SEC will secure victory against Ripple and that the XRP cryptocurrency is doomed. He explained that they are “overstating” the SEC’s chances as the agency’s claims are overstretched.
Deaton cited SEC’s argument about Ripple, alluding that it is a common enterprise. A common enterprise is when the profits of the investor are dependent on the success of third parties or those selling the investment.
Over the course of the courtroom drama, the SEC has been forced by Ripple to admit that holding XRP tokens does not give the investor any rights in the payments company. Moreover, Ripple does not owe XRP holders anything. This indicates that XRP fails the Howey Test as it does not meet the criteria for being considered a security.
The founders of the blockchain payments company Ripple Labs created XRP. Ripple was designed to help banks and other financial institutions move money in real-time and at low costs.
The SEC filed a suit against Ripple in December 2020 on allegations that it raised billions through XRP sales since 2013 and failed to register the offerings as securities as required by U.S. law. At the heart of the matter is whether the regulator can prove the XRP token is in fact a security.
Deaton pointed out that XRP holders submitted at least 3,000 affidavits a year and a half before anyone else petitioned for amicus curiae status. The motions revealed that the bulk of early investors had never heard of Ripple, the company, and they purchased XRP for non-investment reasons. They also received financial benefits independently of Ripple.
Hope Swells For Ripple Victory
Ripple’s high-profile battle with the SEC has attracted support from heavyweights in the financial industry — including America’s largest crypto exchange, Coinbase and crypto lobbyist group Blockchain Association. Ripple claims it has already spent approximately $100 million in litigation and, effectively, to safeguard the entire crypto sector from what it calls overreach by the federal agency.
Two years later, the SEC faces a painful reckoning as Ripple bags countless procedural victories. Most believe the blockchain payments company will win the scorched-earth case and subsequently discredit the 1946 Howey Test.
Prevailing in the case could prove to be a boon for the XRP price, which has been in the doldrums. With a market cap of $19.7 billion, according to CoinGecko data, XRP is currently the sixth most valuable crypto asset.
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- Source: https://zycrypto.com/xrp-lawsuit-crypto-law-expert-perfectly-explains-why-secs-chances-of-defeating-ripple-are-slim/