As the <a href="https://finbold.com/cryptocurrencies/" rel="noopener noreferrer nofollow">cryptocurrency</a> community eagerly awaits the conclusion of the <a href="https://finbold.com/ripple-v-sec-court-case-update-as-of-april-3-2023/" rel="noopener noreferrer nofollow">courtroom standoff</a> between <a href="https://finbold.com/topic/ripple/" rel="noopener noreferrer nofollow">Ripple</a> and the United States Securities and Exchange Commission (<a href="https://finbold.com/topic/sec/" rel="noopener noreferrer nofollow">SEC</a>), a <a href="https://finbold.com/guides/banking/" rel="noopener noreferrer nofollow">banking</a> law expert has highlighted the issue with the use of the Howey Test to determine what is or isn’t an <a href="https://finbold.com/guides/investing/" rel="noopener noreferrer nofollow">investment</a> contract, which could lead the <a href="https://finbold.com/category/regulations-news/" rel="noopener noreferrer nofollow">regulator</a> to lose its “war against <a href="https://finbold.com/guides/cryptocurrency/" rel="noopener noreferrer nofollow">crypto</a>.”Indeed, Todd Phillips pointed to an argument from the <a href="https://aboutblaw.com/6I6" rel="noopener noreferrer nofollow">motion to dismiss</a> in the SEC lawsuit against former <a href="https://finbold.com/review/coinbase-review/" rel="noopener noreferrer nofollow">Coinbase</a> bosses Ishan and Nikhil Wahi, which indicates that Howey isn’t the best way to decide what is an “investment contract,” according to the legal expert’s <a href="https://twitter.com/tphillips/status/1644778926470823942" rel="noopener noreferrer nofollow">tweet thread</a> published on April 8.<h2 id="header-0">Threat to SEC authority?</h2>As he stressed, “You also need a contract, post-sale legal obligations, and the right to share profit. If this becomes the test, then crypto assets are most likely <a href="https://finbold.com/guide/what-are-commodities/" rel="noopener noreferrer nofollow">commodities</a>, giving the [Commodity Futures Trading Commission (<a href="https://finbold.com/topic/cftc/" rel="noopener noreferrer nofollow">CFTC</a>)] jurisdiction.”On top of that, using this argument would be a heavy blow to the SEC’s authority, not just in terms of regulating the <a href="https://finbold.com/category/cryptocurrency-news/" rel="noopener noreferrer nofollow">crypto industry</a>, but with much wider implications, in addition to its use in other court cases, such as against the <a href="https://finbold.com/guide/best-cryptocurrency-trading-platforms/" rel="noopener noreferrer nofollow">crypto exchange</a> Coinbase:<blockquote>“If the SEC loses to this [argument], it could affect the SEC’s authority over non-crypto assets. Idk how deep a cut that would be, but the SEC wouldn’t be happy. Anyway, my guess is this is the argument Coinbase will use when the SEC sues it, and imo that case, is going to [the Supreme Court of the US (SCOTUS)].”</blockquote><h2 id="header-1">Ripple defense on the offense</h2>Meanwhile, on April 9, a <a href="https://finbold.com/guide/corporate-lawyer-salary/" rel="noopener noreferrer nofollow">legal expert</a> and amicus curiae for the <a href="https://finbold.com/topic/blockchain/" rel="noopener noreferrer nofollow">blockchain</a> company, John E. Deaton, cited Phillips’s tweet, <a href="https://twitter.com/JohnEDeaton1/status/1644887408834478082" rel="noopener noreferrer nofollow">saying</a> that the Ripple defense team had already made this argument and that “we are waiting for Judge Torres’ decision any day now. Coinbase also adopted the argument in its Amicus Brief in [Wahi].”Earlier, on April 6, Scott Chamberlain, a former lawyer and co-founder of the permissionless Layer 2 platform Evernode XRPL, <a href="https://twitter.com/scotty2ten/status/1643965805980418048" rel="noopener noreferrer nofollow">argued</a> that the case “would have settled long ago” if the SEC didn’t allege that the <a href="https://finbold.com/cryptocurrency/xrp/" rel="noopener noreferrer nofollow">XRP token</a> was a security, but only that Ripple sold <a href="https://finbold.com/guide/how-to-buy-ripple-xrp/" rel="noopener noreferrer nofollow">XRP</a> as an investment contract.Deaton’s firm CryptoLaw also <a href="https://twitter.com/CryptoLawUS/status/1644344455778975744" rel="noopener noreferrer nofollow">stated</a> that crypto “can’t be an investment contract for those who acquire a token on the secondary market for consumptive use and with no knowledge of, interest in or rights from whoever previously sold it on chain,” in a comment to the SEC Chairman Gary Gensler’s video <a href="https://twitter.com/ss_friedman/status/1644332134105071619" rel="noopener noreferrer nofollow">shared</a> by Susan Friedman, the International Policy Counsel at Ripple.At the same time, lawyer Bill Morgan <a href="https://finbold.com/sudden-twist-in-ripple-v-sec-case-heres-what-happened/" rel="noopener noreferrer nofollow">revealed</a> that the SEC’s own expert had admitted that the price movements of Bitcoin (<a href="https://finbold.com/cryptocurrency/bitcoin/" rel="noopener noreferrer nofollow">BTC</a>) and Ethereum (<a href="https://finbold.com/cryptocurrency/ethereum/" rel="noopener noreferrer nofollow">ETH</a>) could explain as much as 90% of fluctuations in the XRP value since mid-2018, which he considered “surprising,” as <a href="https://finbold.com/" rel="noopener noreferrer nofollow">Finbold</a> reported on April 8.As things stand, XRP is currently changing hands at the price of $0.51, which represents an increase of 0.36% in the last 24 hours but a 2.79% decline over the week, as the digital asset still holds on to the gains of 36.05% accrued across the past month.Read more cryptocurrency news on <a href="https://finbold.com/category/cryptocurrency-news/?utm_source&#61;CMC&amp;utm_medium&#61;social&amp;utm_campaign&#61;CMC&amp;utm_content&#61;long" rel="noopener noreferrer nofollow">Finbold.com</a>.

Ripple v. SEC case update as of April 10, 2023

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