The legal dispute between blockchain company Ripple and the Securities Exchange Commission (SEC) is witnessing new developments as both sides identify flaws in each other’s arguments. Stuart Alderoty, Ripple’s Chief Legal Officer, recently criticized the SEC’s position on the “common enterprise” argument in a tweet on May 13.
Alderoty referred to the SEC’s unsuccessful argument in the Supreme Court’s “Howey” case of 1946, where the regulator claimed that investment in a “common enterprise” was not necessary if there was a “community of interest.” However, the Supreme Court rejected this argument, prompting Alderoty to highlight the SEC’s historical and present misinterpretation of XRP.
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The SEC’s Historical Misinterpretation of the Howey Test
Alderoty asserted that common interest is distinct from joint enterprise, refuting the SEC’s claim that all XRP holders are involved in a joint enterprise. He accused the regulator of attempting to misinterpret the Howey test, specifically focusing on the “common enterprise” aspect. Ripple’s legal team argues that the SEC stretches the definition beyond its original intent.
Crypto Lawyer Points Out Supreme Court’s Rejection of SEC’s Argument
Entering its third year, the legal battle has led the SEC to argue that the fungibility of XRP serves as evidence of a joint enterprise. The regulator contends that the interchangeability of all XRP units and their value fluctuations demonstrate the existence of a joint enterprise.
Summary Judgment Date and Speculations Surrounding the Legal Dispute
Bill Morgan, a crypto lawyer, responded to Alderoty’s tweet by suggesting that the SEC is relying on a point that the Supreme Court had already rejected. He stated that the SEC is attempting to extend the Howey test to cover cryptocurrencies by using an expansive view of the typical enterprise, avoiding the need to link it to specific transactions.
Ripple’s Triumphs Amid Legal Battle
The crypto community eagerly awaits the summary judgment date for the ongoing legal dispute, with the “Howey” case remaining a contentious issue between the two parties. The SEC has accused Ripple of selling unregistered securities in the form of XRP tokens. Speculation suggests that the matter may be resolved in the first half of this year. However, various potential outcomes have been proposed. Throughout the proceedings, Ripple has achieved a few minor victories.
Ripple CEO Brad Garlinghouse expressed his gratitude towards the XRP community for their unwavering support during the legal battle while attending the XRP Las Vegas 2023 event.
Current Status of XRP and Price Fluctuations
Currently, XRP, at the center of the dispute, is trading at $0.43, experiencing a loss of less than 0.5% over the past 24 hours.
The legal battle between Ripple and the SEC intensifies as both sides identify weaknesses in their opponent’s arguments. Stuart Alderoty, Ripple’s Chief Legal Officer, criticized the SEC’s interpretation of the “common enterprise” argument, drawing parallels to a historic Supreme Court case.
Ripple’s legal team asserts that the SEC stretches the definition beyond its original intent. As the summary judgment date approaches, the crypto community eagerly awaits a resolution to the ongoing legal dispute. Ripple has garnered support from its CEO, Brad Garlinghouse, and continues to navigate the legal landscape while the price of XRP remains relatively stable.