One crypto legal expert says the U.S. Securities and Exchange Commission (SEC) has not proven that XRP is a security in the regulator’s lawsuit against Ripple Labs.
In a lengthy thread, attorney and XRP supporter Jeremy Hogan tells his 263,300 Twitter followers why he believes the SEC has so far failed to prove XRP is a security.
The SEC sued Ripple in late 2020 under allegations that the company sold XRP as an unregistered security.
“First, under the legislative definition of a security, XRP can only POSSIBLY fit under the definition of an ‘investment contract.’ It is not a stock or bond, etc… Even the SEC concedes this: ‘investment contract.'”
Hogan says the SEC has so far failed to prove that there was a contract of investment for investors in XRP, one of the key features of a security, according to the Howey Test.
“In the Ripple case, the SEC has failed to argue that there was an implied or explicit contract of investment.
Instead it argues that the purchase agreement is all that is required – and that is all it proves.
But that argument tears the ‘investment’ from the ‘contract’…
As a simple purchase, without more, cannot be an ‘investment contract,’ it is just an investment (like buying an ounce of gold) as there is no obligation for Ripple to do anything except transfer the asset.”
Hogan says that securities laws were not created to prevent investors from making bad decisions, but to require that companies make certain disclosures regarding the contract that the purchaser is entering.
The lawyer adds,
“The issue is NOT whether Ripple used money from the sale of XRP to fund its business.
The issue is whether the SEC has proven that there was either an implied or explicit “contract” between Ripple and XRP purchasers relating to their ‘investment.’
There was no such contract.”
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