- Legal expert clarifies XRP ruling: Not a security, but part of securities offerings.
- Judge Torres found insufficient evidence for some XRP sales as securities.
- Legislation needed to address regulatory gaps and classify crypto assets clearly.
Mike Selig, a prominent crypto and financial regulation lawyer, has taken to Twitter to provide clarification on Judge Analisa Torres’ ruling in the SEC v. Ripple case. Selig’s comments come as he believes many commentators have misunderstood the court’s decision regarding XRP’s security classification.
In a Twitter thread, Selig emphasizes that Judge Torres did not rule that XRP is a security when sold to institutional clients and not a security when sold to retail investors. Instead, the judge says XRP itself is not a security. However, she says it can be sold as part of a security offering.
The lawyer emphasizes that XRP, essentially a computer code, could involve itself in investment schemes that implicate securities laws. He says this is much like gold or whiskey in certain investment contexts.
Specifically Selig states that the court has the role of determining whether an investment involves putting money into a common enterprise with an expectation of profits based on the efforts of others. The judge, according to Selig, found insufficient evidence to classify certain XRP sales as securities under the Howey test, a legal assessment used to determine investment contracts.
In addition, Selig defends Judge Torres’ decision and notes that no legal precedent supports the view that a commodity can embody a security, implying that crypto assets, including XRP, cannot be deemed investment contracts.
However, the legal expert points out that the ruling exposes a significant regulatory gap regarding crypto assets. He argues that legislation is necessary to address this gap and grant regulatory agencies like the SEC or CFTC the authority to make new rules for crypto assets.
In response to Selig’s post, John Deaton, founder of Crypto-Law.US, shows amazement at how several experts continue to misstate the judge’s decision. Deaton raised concerns about whether these misinterpretations are deliberate and aimed at promoting a false narrative.
Meanwhile, Deaton draws light to an old tweet from two years ago that holds merit to this day. Bitcoin, Ether, and XRP are at the forefront of the crypto asset race, would you agree? The responses to his calling are mostly positive.
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