Attorney Jeremy Hogan has suggested that the U.S. Securities and Exchange Commission (SEC) has failed to successfully argue in court that XRP should be classified as a security.
In a series of tweets posted on April 9, 2023, Hogan reiterated his position that XRP could not be classified as a security under any definition other than an investment contract.
He further explained that XRP doesn’t meet the criteria of stocks or bonds, which are other types of securities. He argued that the use case of XRP as a currency and its pre-existence before Ripple’s creation differentiates it from other tokens that have been marketed as securities.
The #1 reason why XRP is not a Security (a thread).
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.” pic.twitter.com/n9g7ZEos2n
— Jeremy Hogan (@attorneyjeremy1) April 9, 2023
Hogan went on to explain that the Howey test established the standard for analyzing “investment contracts.” This test case required an investment in a common enterprise with the expectation of profits derived from the efforts of others. The court assumed that a “contract” was a necessary element of an “investment contract.”
Hogan believes that the central issue in the Ripple case is not whether Ripple used the funds from XRP sales to support its activities but whether the SEC has demonstrated the existence of an implicit or explicit “contract” between Ripple and XRP purchasers concerning their investment. According to Hogan, no such contract exists.
The SEC filed a lawsuit against Ripple Labs in December 2020, alleging that the company and its executives had sold unregistered securities in the form of XRP. The case is ongoing, and a trial is expected later this year.
Ripple denied the allegations, claiming that its transactions did not meet the Howey test requirements, which the U.S. Supreme Court established in the 1946 case of SEC v. W.J. to determine whether a transaction qualifies as an investment contract.
Expert opinions on the Ripple vs. SEC case have been divided. Some believe that neither side has an advantage following Judge Analisa Torres’ decision to dismiss portions of both parties’ “Daubert” motions during the hearing on March 6, 2023. These motions sought to exclude the presentation of expert testimony.
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