Bill Morgan Clarifies SEC’s Stance on XRP Sales in the Ripple vs SEC Case
Renowned lawyer and crypto enthusiast Bill Morgan recently took to Twitter to provide insights on the ongoing debate surrounding XRP and its classification as securities. Morgan aimed to clarify the confusion surrounding the matter.
Morgan’s response was prompted by former SEC director John Reed Stark’s statement, which claimed that the judge overseeing the Coinbase-SEC case disagreed with Judge Torres’ ruling that secondary sales of XRP cannot be considered investment contracts or unregistered securities.
Morgan quickly debunked Stark’s claim, stating that it was incorrect. He pointed out that Judge Torres never made such a finding regarding secondary market sales of XRP, so there was no disagreement for Judge Failla to address.
Legal expert Marc Fagel then challenged Morgan’s argument, suggesting that it is difficult to imagine how any token sale through an exchange would meet Torres’ Howey standard.
Morgan respectfully disagreed with Fagel, explaining that Torres’ reasoning specifically applied to Ripple’s programmatic sales, as those were the only three categories the SEC presented for consideration. Torres found that these programmatic sales did not qualify as investment contracts, taking into account various specific circumstances, including Ripple’s promotion of XRP to secondary market investors.
While Torres did find evidence of Ripple’s promotion of XRP to institutional investors, there was no evidence of broader promotion. Therefore, this scenario cannot be applied indiscriminately to other cryptocurrencies like Solana.
Morgan argued that since the Howey test is a fact-specific evaluation, Torres’ finding regarding programmatic XRP sales should not be interpreted as a blanket statement that no secondary market sales of cryptocurrencies on exchanges can ever be considered investment contracts.
In Morgan’s opinion, Torres’ finding on Ripple’s promotion was based on uncontested evidence, and there are no obvious factual errors. Therefore, he believes the SEC’s chances of success in an appeal are quite low.
Tags: Ripple (XRP)