Ripple Chief Legal Officer Counters SEC Case That XRP is a Security
Stuart Alderoty, the chief legal officer at Ripple, has criticized the SEC's argument that XRP is a security
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Pointing to the 1946 Supreme Court case SEC vs W.J. Howey Co., Alderoty claims that legal precedent is on Ripple's side.
He said "the SEC was wrong then and it is still wrong now."
now, the SEC claimed that the Howey company’s business amounted to selling unregistered securities because the transactions qualified as investment contracts.
However, the Supreme Court ruled that Howey’s agreements with buyers did not count as investment contracts. That ruling has since become a foundational case in establishing whether or not a given asset or contract is subject to securities law.
In what has become known as the Howey Test, an investment contract exists if there is an “investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others.”
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As Alderoty pointed out in his tweet, the Howey Test rests upon exactly how a “common enterprise” is defined.
Back in 1945, he notes that the SEC unsuccessfully argued that an investment in a common enterprise was unnecessary provided there was a “community of interest.”
In Ripple’s case, the community of interest would be anyone who buys XRP. And of course, many people to purchase the token anticipating that the price of XRP will rise. But because Ripple offers no assurances that investors will turn a profit, Alderoty implies that there is no common enterprise.
“The SEC was wrong then and it is still wrong now. Common Interest ≠ Common Enterprise,” he stressed.
https://beincrypto.com/xrpsec-case-that-xrp-is-a-security/