XRP Suit: Lawyer Questions SEC’s Basis for Security Label

Lawyer Bill Morgan challenges the classification of XRP as a security, sparking a reevaluation of regulatory criteria.

XRP coins being airdropped from a cloudy sky.
Created by Gabor Kovacs from DailyCoin
  • Lawyer Bill Morgan has challenged the conventional classification of XRP as a security.
  • Morgan has emphasized the distinction between Ripple’s sales and the nature of XRP itself.
  • An airdrop scenario has been explored in a hypothetical setting.

Lawyer Bill Morgan recently ignited a captivating debate on Twitter surrounding the classification of XRP as a security. His thought-provoking tweets challenge the conventional understanding of XRP’s pre-existing nature and relevance in determining its regulatory status. 


Morgan’s initial tweet poses a fundamental question: Should the classification of XRP as a security be influenced by its existence before any investment contract or security sale? This query raises intriguing insights into the interplay between XRP’s creation timeline and regulatory categorization.

The lawyer’s argument disrupts the prevailing notion that XRP’s pre-existing nature should be entirely dismissed in regulatory considerations. Although XRP did not originate from a sale or investment contract, Morgan suggests that this alone may not be sufficient grounds to exclude it from the classification as a security.

Morgan’s Hypothetical XRP Airdrop Scenario

Continuing his inquiry, Morgan presents a compelling hypothetical scenario in his second tweet. He contemplates how the classification of XRP would be impacted if its creators had distributed the entire supply through an airdrop in 2012, granting it to those who established a trust line without any subsequent sales or offers. 

This hypothetical situation would have eliminated the need for investment contracts or sales agreements among the individuals currently involved in XRP network projects.

In his final tweet, Morgan emphasizes distinguishing between the relevance of XRP’s pre-existing nature and whether Ripple’s sales constitute investment contracts. 


While acknowledging that Ripple’s sales may fall under the purview of investment contracts, as asserted by legal expert Marc, Morgan highlights the necessity of differentiating between the regulatory status of Ripple’s sales and the inherent nature of XRP itself.

On the Flipside

  • XRP’s pre-existing nature should be entirely disregarded in its classification as a security, emphasizing the importance of evaluating its characteristics and functionality instead.
  • XRP’s hypothetical airdrop scenario overlooks the potential impact of widespread distribution without proper regulatory oversight.
  • The traditional criteria for determining regulatory status in cryptocurrency could introduce uncertainty and undermine investor confidence in the broader market.

Why This Matters

By challenging the conventional understanding of XRP’s pre-existing nature, Morgan prompts reevaluating regulatory criteria in the crypto sphere, potentially setting a precedent for future classifications.

To learn more about the controversy surrounding XRP and its link to Ripple, read here:

52% of XRP Holders Could Unknowingly Be Linked to Ripple Controversy

To stay updated on Ripple’s collaboration with Colombia’s central bank to explore the XRP Ledger for a pilot CBDC, read here:

Ripple and Colombia’s Central Bank Explore XRP Ledger in Pilot CBDC


Who is the lawyer Bill Morgan?

Bill Morgan is a legal professional known for his expertise in the field. He recently gained attention for his insightful tweets regarding classifying XRP as a security. While specific details about his background and experience are not provided in the given context, his contributions to the ongoing discussions surrounding XRP have sparked considerable interest.

What is an airdrop in crypto?

An airdrop refers to a distribution of free tokens or cryptocurrencies to a group of individuals. It involves delivering these tokens or coins directly into the participants’ wallets. Airdrops are often used as a promotional strategy by crypto projects to increase awareness, attract users, or reward existing community members. The recipients of the airdropped tokens may need to fulfill specific criteria or requirements set by the project to be eligible for distribution.

Are crypto airdrops risky?

The level of risk associated with crypto airdrops can vary depending on several factors. While airdrops typically do not involve direct financial costs for recipients, there are potential risks. These may include receiving tokens from unfamiliar or potentially fraudulent projects, compromising the security of personal wallets during the airdrop process, or unknowingly participating in scams disguised as legitimate airdrops. It is important for participants to exercise caution, conduct research on the project offering the airdrop, and employ proper security measures to mitigate potential risks.

What can replace XRP?

Currently, there is no direct replacement for XRP, as each cryptocurrency serves different purposes and has unique features. However, various alternatives exist within digital assets and blockchain-based systems that offer similar functionalities or aim to address similar use cases. Some notable examples include Stellar (XLM), which focuses on cross-border payments, and Ethereum (ETH), known for its smart contract capabilities and diverse ecosystem. Ultimately, choosing a suitable alternative to XRP would depend on specific requirements and preferences.

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.

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.