XRP’s Value Reduced to “Nothing but Computer Code” in SEC Case

In a pivotal regulatory clash, the SEC relegates Ripple’s XRP to mere ‘computer code.’ Could this influence the case?

Huge hand in space letting go of some code to the disappointment of a man standing on a planet.
Created by Gabor Kovacs from DailyCoin
  • The SEC’s legal battle with Ripple Labs has seen twists amid scrutiny of XRP’s fundamental nature.
  • Brad Garlinghouse and Chris Larsen have remained central figures in the ongoing legal saga.
  • Legal experts have raised concerns about the implications of the SEC’s evolving stance on crypto.

The convoluted legal dispute between the United States Securities and Exchange Commission (SEC) and Ripple Labs continues to take unexpected twists and turns. It’s crucial to recall that the SEC initiated a lawsuit against Ripple, accusing them of engaging in the unregistered sale of XRP, which the SEC claimed to be securities.

Judge Analisa Torres, presiding over the case, rendered a significant ruling by classifying XRP as something other than a security. 

SEC Downplays XRP’s Inherent Value in Recent Filing

As the case progresses towards its trial, which aims to scrutinize whether Ripple CEO Brad Garlinghouse and Executive Chairman Chris Larsen had a hand in facilitating XRP sales to institutional investors, the SEC has initiated a motion to seek an interlocutory appeal specifically concerning programmatic sales and other facets of XRP transactions.

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The SEC has amended its language in this filing, asserting that its pursuit does not involve a comprehensive review of the fundamental nature of XRP itself, which they now deem as “nothing but computer code with no inherent value.” 

Even regulatory bodies in the United Kingdom have expressed a similar sentiment, contending that cryptocurrencies inherently lack intrinsic value. 

Is the SEC Undermining Cryptocurrencies as Commodities?

Bill Morgan, a perceptive observer of the crypto landscape and a legal expert, has raised an intriguing point. He asserts that the SEC’s current stance appears to be an effort to persuade the judiciary that cryptocurrencies should not be considered commodities. 

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Morgan draws attention to Judge Torres’ classification of the Gram token as a commodity, a categorization that the SEC seemingly finds disfavorable.

Morgan’s perspective on the matter is succinct: “I think the SEC believes its job is made easier on certain prongs of Howey in crypto cases if it can convince courts that cryptos have no intrinsic value. It means that issuers need to find utility to give value to a crypto with no inherent value.”

On the Flipside

  • There is a worry that regulatory overreach could discourage entrepreneurs and innovators from exploring new cryptocurrency projects due to the fear of facing legal action.
  • Cryptocurrencies derive their value from various factors, including their utility within decentralized ecosystems, which challenges the notion of them having no inherent worth.
  • A well-defined regulatory framework would benefit both crypto projects and investors by promoting transparency and compliance.

Why This Matters

Understanding the SEC’s evolving stance on cryptocurrencies, particularly XRP, goes beyond this legal battle. It sets a precedent for how regulatory bodies worldwide perceive digital assets and their intrinsic value. This case can potentially shape the future of crypto regulations and how they intersect with innovation and investor protection.

For insights into Ripple’s General Counsel celebrating Grayscale’s victory against the SEC, click here:
Ripple’s General Counsel Celebrates Grayscale’s Victory Against SEC

To learn more about a recent lawsuit involving Gala Games founders and an alleged $130 million theft, read here:
Gala Games Founders Sue Each Other Over Alleged $130M Theft

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.