A crypto legal expert says he sees a complete and total victory for Ripple over the U.S. Securities and Exchange Commission (SEC) as the most likely outcome of the XRP lawsuit.
The SEC sued Ripple in late 2020, alleging that the payments firm sold the crypto asset XRP as an unregistered security.
Attorney Jeremy Hogan tells his 157,000 YouTube subscribers that he sees Ripple coming out victorious at summary judgment as he believes XRP was not sold as a security.
According to Hogan, there are two bases for this outcome. The crypto legal expert says the first basis is that Ripple had no legal obligation to buyers of XRP after the sale took place.
Hogan cites an amicus brief filed by crypto-focused investment firm Paradigm Operations to support his thesis.
“In [Paradigm’s] brief, it cites to the work of one its law firms… They reviewed 266 legal decisions related to securities violations, and in their brief on page two it states:
‘A comprehensive analysis of federal and appellate law reveals that no authority exists to support the SEC’s attempt to transmute the Howey analysis of an investment contract transaction into a conclusion about the underlying asset. In every application of Howey where an investment contract was found, there was some identifiable legal relationship between an ostensible issuer and the investor providing investment capital.’
The evidence is clear in the Ripple case that there is no ongoing legal relationship between Ripple and XRP purchasers. There’s just none, and the SEC has failed to address that problem.”
Hogan emphasizes that the law requires an “investment contract” and not a “sales contract.” The lawyer notes that Ripple sold XRP without any legal promise to do anything further, which is the sale of an asset and not a security.
Next, Hogan focuses on the second prong of the Howey test, which states that an investment contract exists if there is a common enterprise. According to the crypto legal expert, the SEC has three major issues in this arena.
“First, how can any purchaser have reasonably relied on Ripple to increase XRP’s price when Ripple had no post-sale obligations to them? It’s like buying a Tesla and then suing Elon Musk when it fails to increase in value…
The second problem the SEC has is that Ripple, through attorney John Deaton, have actually submitted hundreds of affidavits from actual XRP holders, many of which have never even heard of Ripple when they bought XRP.
And third, while the SEC has apparently abandoned its expert witness on the issue as to whether Ripple’s efforts had any effect on the price of XRP, Ripple’s expert witness analysis is that for the most part and especially since 2018… the price of XRP moves based on the crypto market, in sync, and it does not really move with any business moves that Ripple makes.”
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