As the Ripple lawsuit with the U.S. Securities and Exchange Commission (SEC) nears its end, industry professionals have shared their opinions on the case’s developments. Jeremy Hogan, a partner at Hogan & Hogan, believes that the SEC has not successfully demonstrated that XRP should be classified as a security.
Hogan suggests that the SEC has not proven the existence of an “implied and explicit investment contract” between Ripple and its customers. Instead, he argues that the SEC only attempted to show a purchase agreement, which differs from an investment contract as there is no obligation on the vendor. Hogan questions how an investor could “reasonably rely” on a profit when they have no legal recourse if the vendor fails to deliver.
The SEC initially filed a case against Ripple and two of its executives in 2020, alleging they issued unregistered securities worth over $1.3 billion. Ripple has since contested this classification, arguing that XRP does not meet the requirements of the Howey Test.
Tensions have escalated as the SEC and other regulators have increased pressure on the digital asset sector. SEC Chairman Gary Gensler recently suggested that Ethereum (ETH) and other proof-of-stake (PoS) assets could be considered securities, as staking can be seen as an investment for potential profit.
While some investors praise the SEC for its efforts to combat scams in the industry, others criticize the commission for stifling growth. The XRP Army, in particular, blames the SEC’s ongoing case for the troubles XRP faces in the market.