The Securities and Exchange Commission (SEC) has recently made a significant move by filing its Form C, challenging a court’s decision concerning Ripple’s sales of XRP. This appeal zeroes in on three crucial aspects: the sale of XRP via exchanges, Ripple’s distribution of XRP to its employees, and the sales executed by Ripple’s executives, Brad Garlinghouse and Chris Larsen. Ripple’s Chief Legal Officer has suggested that a potential Form C filing is on the horizon for next week, stirring anticipation among industry observers.
Insights from The Good Morning Crypto Show
On a recent episode of The Good Morning Crypto Show, James Murphy, also known as MetaLawMan, provided insights into Ripple’s upcoming filing. He remains optimistic that Ripple’s appeal will receive a more favorable reception at higher judicial levels, where judges are able to explore the intricacies of the case more thoroughly. James argues that the connection between XRP holders and Ripple deviates significantly from the traditional investor-company relations, potentially influencing future rulings in Ripple’s favor.
Ripple’s Standpoint on XRP as a Security
James contends that the SEC’s classification of XRP as a security overlooks the fact that XRP holders do not gain direct advantages from Ripple’s earnings or operations. He points to historical court decisions in cases like Telegram, suggesting these have misrepresented the essence of digital tokens, thereby creating confusion over what truly constitutes an investment contract.
Potential Arguments by Ripple
Ripple is likely to argue that its transactions with institutional investors and specific dealings on the On-Demand Liquidity (ODL) platform do not qualify as investment contracts. James finds the argument concerning ODL particularly compelling. He elaborates that Ripple perceives these transactions as wholesale contracts, indicating that the intention was for institutions to resell XRP rather than invest directly in Ripple. This perspective underscores a growing frustration with the application of outdated legal frameworks to innovative technologies such as cryptocurrency.
James is hopeful that if Ripple can successfully challenge the court’s decision, it might lead to the removal of the penalties imposed, which were calculated based on the volume of transactions involving institutional sales and ODL, amounting to $125 million.
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