The United States Securities and Exchange Commission (SEC) looks hell-bent on proving a point in its legal battle against the Ripple blockchain and the XRP community. Recall that the SEC filed a lawsuit against Ripple in 2020, alleging that XRP sold out without prior registration of the tokens as a security.
Latest Update On The Legal Tussle Between SEC and Ripple
In the latest development, the U.S. SEC has revealed its finalized plan to prove XRP as a security. Pro-crypto lawyer Bill Morgan disclosed the SEC’s intended plan via a tweet on his official Twitter handle. Findings from Morgan’s tweet explain how the SEC aims to lengthen the Howey test to protect crypto since the court plans to make the test flexible.
Morgan added that the SEC hopes to expand the test to obscure crypto by an extensive view of an ordinary enterprise, initiating the regulator’s priority on “common” while avoiding the word “enterprise.”
The Ripple attorneys have realised that the SEC focuses on the word ‘common’ and are trying to broaden the Howey test by arguing a point they failed on in the Howey case itself. /4
— bill morgan (@Belisarius2020) May 14, 2023
Morgan noted that the test expansion strategy has made it highly unlikely to identify the common enterprise in the legal face-off involving SEC and XRP owners.
In addition, Morgan added that SEC would not hesitate to switch to the fungible argument if its argument does not suffice.
Morgan also shared some proofs that demonstrate the SEC argument; “all units of XRP are fungible with each other,” and their prices move concurrently. In a new development, Ripple’s legal team reportedly opposed the SEC’s fungible claim in its opposed motion for a summary verdict by utilizing gold as a model.
The fact that you could say the same about an ounce of gold is no problem for the SEC. However, this is just common interest. Ripple’s attorneys obviously worked out the SEC was trying to pull a swifty & surreptitiously argue an old point the Supreme Court had rejected in Howey/7
— bill morgan (@Belisarius2020) May 14, 2023
Read Also: Ripple CEO Brad Garlinghouse Predicts New End Date for XRP Lawsuit: Details
What Does This Latest Update Means For The Crypto Sphere?
Morgan hinted that should Judge Analisa Torres allow the SEC to get away with its proposed scheme of equating the unified industry to a common interest, the securities regulator will use the same argument against other crypto projects, which may indicate bad news for the crypto space.
So Ripple’s lawyers in Ripple’s SJ motion attacked the fungible (common interest) point and actually used the example of gold to make their point /8 pic.twitter.com/ISdaqmLFvy
— bill morgan (@Belisarius2020) May 14, 2023
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