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Ripple vs. SEC: New Mail Discovery Challenges XRP Security Status

2 mins
Updated by Ali Martinez
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In Brief

  • Pro-Ripple lawyer John Deaton has uncovered a mail suggesting the SEC knew that XRP did not fully meet its definition of security.
  • XRP community has questioned why Ripple did not emphasize this finding in its defense.
  • Over the past week, Ripple has made several positive announcements to advance XRP’s cause.
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Internal emails from the U.S. Securities and Exchange Commission (SEC) suggest that the regulator knew that XRP did not fully meet the definition of a security.

Crypto lawyer and XRP supporter John Deaton pointed out this evidence in the earlier filings by Ripple. Deaton wondered why Ripple’s legal team did not emphasize the email’s implication despite its importance.

SEC’s Email on XRP

The emails referred to in exhibit 220 argue that there are reasonable grounds not to consider XRP as a security because it does not satisfy the Howey test.

SEC Mail on Ripple's  XRP
SEC’s Mail on XRP (Source: Twitter)

There are “reasonable grounds to conclude that XRP does not satisfy all elements of the Howey Analysis and is therefore not a ‘security’ for purposes of the federal securities laws,” the email reads.

The SEC case against Ripple is hinged on the argument that XRP and most cryptocurrencies should be classified as securities because they meet the definition of the term under the Howey Test.

Thus, any admission by the SEC or its official that XRP does not constitute a security in its internal documents could be disastrous to its case.

Community Debates New Finding

Deaton suggested that it was likely that the statement was not a direct quote from an SEC official and that the official could be referencing someone else’s analysis of XRP.

Another pro-crypto lawyer Bill Morgan said an SEC attorney most likely sent the mail. Morgan said:

“Most likely a SEC attorney, given how many were involved and commented on Hinman’s speech expressing his personal opinion.”

Meanwhile, all these are still speculations that many believe would be clarified when the SEC releases the emails relating to the Hinman documents.

Ripple Continues to Make Advancements

Over the past week, Ripple has made several announcements, showing that the company is focused on growing its platform.

Ripple bought Swiss custody firm Metaco for $250 million. The company’s CEO, Brad Garlinghouse, said the purchase was part of its effort to “focus on growth opportunities outside the U.S.”

The crypto-payment company confirmed that its CBDC Platform can interact with the XRP Ledger (XRPL) and XRP token.

BeInCrypto reported that XRPL saw the number of daily addresses grow by 13.9% in Q1 2023 compared to the last quarter of 2022. Daily transactions on the network also increased by 10.7%, while XRP’s price grew by 55.5%. 

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Oluwapelumi Adejumo
Oluwapelumi believes Bitcoin and blockchain technology have the potential to change the world for the better. He is an avid reader and began writing about crypto in 2020.
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