January 26, 2023

A crypto legal expert says he sees a full and total victory for Ripple over the US 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 company had been selling the crypto asset XRP as an unregistered security.

Lawyer Jeremy Hogan tells his 157,000 YouTube subscribers that he sees Ripple coming out victorious because he believes XRP was not sold as collateral.

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 purchasers of XRP after the sale took place.

Hogan cites an amicus brief submitted by crypto-focused investment firm Paradigm Operations to support his thesis.

“In [Paradigm’s] briefly, it cites the work of one of its law firms… They reviewed 266 legal decisions related to securities violations, and their briefing on page two states:

A comprehensive analysis of federal and appellate law reveals that no authority exists to support the SEC’s attempt to turn the Howey analysis of an investment contract transaction into a conclusion on the underlying asset. In every Howey filing where an investment contract was found, there was an identifiable legal relationship between an apparent 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 buyers. It just isn’t there, and the SEC hasn’t addressed that problem.”

Hogan emphasizes that the law requires an “investment contract,” not a “sale 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.

Hogan then turns to the second pillar of the Howey test, which states that there is an investment contract when there is a joint venture. According to the crypto legal expert, the SEC has three major problems in this area.

“First, how could a buyer reasonably have relied on Ripple to raise the price of XRP when Ripple had no post-sale obligations to them? It’s like buying a Tesla and then suing Elon Musk if it doesn’t increase in value…

The second issue the SEC has is that Ripple, through attorney John Deaton, has filed hundreds of affidavits from actual XRP holders, many of whom have never even heard of Ripple when they bought XRP.

And third, while the SEC has apparently abandoned its expert witness on 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 doesn’t really move with Ripple’s business moves.


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