XRP Advocate Highlights Crucial Factor in Decrypting Ripple’s Victory against SEC Lawsuit
Ripple’s legal team has consistently relied on the Revak v. SEC Realty case to support its position against the Securities and Exchange Commission (SEC), exposing the SEC’s attempt to undermine cryptocurrency.
In a recent discussion, Paul Grewal, Coinbase’s Chief Legal Officer, and John Deaton, a prominent lawyer representing XRP holders, shared their insights on the crucial aspects of Ripple’s case, with a focus on the 1994 Revak case.
Grewal once again mentioned the Revak case and highlighted how ridiculous it is to evaluate an investment deal based on “ecosystem” access. He reiterated the court’s position on the Howey test, stating that a simple connection between investor wealth and promoter activities does not easily meet the requirements. The court must establish that a common enterprise is fundamentally reliant on promoter expertise for investments to be dependent on luck.
The SEC’s digital asset analysis framework, available on its website, states that federal courts require “horizontal commonality” or “vertical commonality” to satisfy the “common enterprise” component of the Howey test. However, the Commission itself does not explicitly mandate these commonalities and does not treat “common enterprise” as a separate element of an “investment contract.”
John Deaton agreed with Grewal and drew parallels between the Revak case and the ongoing legal battles between LBRY, Ripple, and Coinbase. He emphasized the jurisdictional details, highlighting the connection between the Revak case, which was heard by the Second Circuit, and the Ripple and Coinbase cases.
The latest updates in the SEC vs. Ripple and Coinbase lawsuits have significant implications for the digital asset landscape. A recent ruling allowed the SEC to proceed with its lawsuit against Coinbase but limited its scope, seen as a partial victory for Coinbase. The SEC is challenging Ripple’s dismissal, claiming that Ripple failed to demonstrate harm in producing recent financial statements.
The outcome of these lawsuits could impact the XRP ecosystem, potentially paving the way for spot XRP ETFs if there is a positive resolution for Ripple. Meanwhile, Ripple’s strategic hiring in institutional DeFi indicates a desire to expand its influence in the cryptocurrency ETF space.