Ripple decentralized and XRP not a security, says Crypto Lawyer
A pro-Ripple crypto lawyer has predicted that the fintech firm will win its case against the Securities and Exchange Commission.
On April 11, pro-Ripple attorney Jeremy Hogan posted a detailed thread about why he thinks the firm will win the case.
The SEC sued the company back in December 2020, accusing it and its executives of selling unregistered securities.
The case has dragged on for more than two years. However, the result could be a watershed for the entire US crypto industry.
“This is a nuanced legal battle on which the future of ‘crypto’ as we know it may depend,” Hogan so.
XRP is decentralized (or is it?)
Ripple argued that there must be a “contract” for something to be considered a security. This is established by the Howey test on which the SEC’s argument hinges.
However, Hogan noted that the agency cited several cases where there was no written formal agreement. Furthermore, it has been successful in cases where there has not been an “investment contract.”
This is not good news for Ripple.
Hogan believes there is enough in the Ripple pulleys for the trial judge to rule in its favor. It rests on one thing, he added – decentralization.
Traditional purchases need a contract because centralized entities make them. This is why they lost their cases to the SEC, Hogan claimed. “Historically, securities sales are from centralized sellers,” he said, before adding:
“The difference in crypto is that it DOES make sense to buy crypto, because it’s decentralized. No one owns the ‘network’. And so it makes sense that someone can buy XRP as an investment without having a contract with anyone. This is the main differentiator .”
If the judge understands the technology, “Ripple will win on this issue,” he said.
Ripple Use Cases a better argument
However, a counterargument could be that XRP is centralized because it is controlled by Ripple. The fintech firm has kept around half of the total supply of XRP tokens in custody and is releasing them according to its own schedule.
This differs from the supply of Bitcoin, which is governed by the proof-of-work mechanism, or Ethereum, which is issued by proof-of-stake consensus.
With this in mind, Ripple’s use cases may be a better argument for why it will win. The XRP Ledger is used by banks and financial institutions worldwide. Therefore, XRP is essentially a cross-border payment system, not a security.
XRP has gained 4% on the day to reach $0.525 at the time of writing.
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