Ripple CTO Challenges SEC’s Language Shift Amid Legal Battle

In the Ripple-SEC legal saga, David Schwartz challenges SEC’s language shift, while experts question Judge Torres’s ruling validity.

Ripple CTO David Schwartz, looking at Gary Gensler up close with magnifying glass.
Created by Kornelija Poderskytė from DailyCoin
  • Subtle linguistic shifts have ignited intense debates amid the ongoing SEC vs. Ripple legal clash.
  • Ripple’s CTO has challenged the SEC’s choice of words about the nature of security classification.
  • The court ruling has faced scrutiny as experts dissect the fusion of transactions and investment contracts.

Amidst the ongoing legal battle between the blockchain giant Ripple and the United States Securities and Exchange Commission (SEC), discussions surrounding the intricate details of the case and the summary judgment passed by Judge Analisa Torres have been gaining momentum.

Ripple’s CTO Challenges SEC’s New Language on Crypto Assets

Lawyer Bill Morgan had underscored a notable shift in the SEC’s verbiage, noting that the term “selling digital asset securities” had evolved into “crypto assets offered and sold as securities” in a settlement involving the cryptocurrency exchange Bittrex and its co-founder and CEO, William Shihara.

Ripple’s Chief Technical Officer, David Schwartz, also commented on these changes, vehemently challenging what he referred to as a “subtle but significant change” in the SEC’s language, a point initially brought forth by attorney Morgan. On the 11th of August, Schwartz adamantly declared this alteration to be “completely incoherent.”

Schwartz drew an analogy between the XRP token and Howey’s cultivation of orange groves. He emphasized that akin to real estate agents who marketed and sold the latter as securities, they would not be contravening any laws if they chose to sell these same orange groves through straightforward asset transactions.

Building upon this comparison, Ripple’s CTO expounded that labeling something as a security does not inherently classify it as such. He further asserted that the Howey case did not entail brokers reselling Howey trees; instead, it revolved around transferring contractual rights and obligations. 

Morgan Questions Judge Torres’s Ruling on XRP Sales

Morgan also delved into a specific facet of Judge Torres’s ruling, wherein she amalgamated sales to on-demand liquidity (ODL) customers with other transactions involving institutions. Morgan, however, questioned the rationale behind this amalgamation and why this specific category of sales was characterized as investment contracts. 

He pointedly queried, “Where is the promise of a share in profits. How is there an investment? It was part of the undisputed record that these ODL users sold or exchanged their XRP in seconds.”

On the Flipside

  • The grouping of ODL customers with other sales might stem from the SEC’s intention to consistently apply regulatory standards across various XRP transactions.
  • The adjustment in the SEC language could be seen as an attempt to encompass a broader spectrum of crypto-related activities under the regulatory framework.
  • The XRP-orange grove analogy oversimplifies digital assets, as their distinct features surpass traditional transactions.

Why This Matters

As the debate delves into nuanced interpretations of securities laws, this case emerges as a litmus test, potentially shaping the future trajectory of cryptocurrency regulations. A clarifying judgment could establish precedent and illuminate the path for crypto enterprises, investors, and enthusiasts, resonating far beyond this courtroom battle.

To learn more about potential scenarios and expert insights on the Ripple-SEC showdown, read here:

3 Scenarios in Ripple vs. SEC Showdown Discussed by Legal Experts

To learn more about MicroStrategy’s impact and the evolving focus on Bitcoin ETF decisions, read here:

DailyCoin Bitcoin Regular: ETF Decision Today?

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Kyle Calvert

Kyle Calvert is a cryptocurrency news reporter for DailyCoin, specializing in Ripple, stablecoins, as well as price and market analysis news. Before his current role, Kyle worked as a student researcher in the cryptocurrency industry, gaining an understanding of how digital currencies work, their potential uses, and their impact on the economy and society. He completed his Masters and Honors degrees in Blockchain Technology within Esports and Business and Event management within Esports at Staffordshire University.