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- Ripple may file a motion regarding the current classification of XRP at any time prior to the completion of the discovery phase.
- According to attorney Jeremy Hogan, Ripple plans to do just that in order to continue its escrowed XRP and thus its business as quickly as possible.
In a new video, attorney Jeremy Hogan has uncovered a “new hope” for the XRP community. It’s “a super important litigation strategy Ripple is going to implement, and I call it the new hope.” (Disclaimer: Neither Jeremy Hogan nor Crypto News Flash are giving financial or legal advice).
The SEC has jurisdiction over trading, buying and selling, but not holding securities in the United States. Therefore, a security comes under the SEC’s jurisdiction only if it was a security at the time of sale. Each sale must be considered individually, as circumstances may change.
At the time of the sale, Ripple must have advertised the expectation that XRP would increase in value as a result of its activities. The key, then, is whether and, if so, when Ripple was the primary driver of XRP’s price at a given point in time. Hogan stated:
The analysis changes quickly as the use cases for the asset are actually build out so that the XRP that Ripple sold in 2014 might have been the sale of a security but XRP Ripple sold in 2018 might not have been the sale of a security. It depends on whether Ripple was the driver of XRP value on the time of sale.
Hogan also referenced a statement from SEC Commissioner Hester Peirce in the video. She recently emphasized, in reference to the Howey test and the underlying 1946 case, that the issue was the manner of the sale. The oranges, which is what the case revolved around, obviously could not be classified as securities – but only the sale. Hogan concluded:
So a XRP token can not inherently be a security. It’s the sale or offering that makes it a sale of a security.
Ripple’s supposed strategy
In this regard, Hogan again sifted through previous correspondence between the SEC and Ripple, finding evidence that this may be precisely Ripple’s strategy. At the end of the pre-trial letter, Ripple stated, “Accordingly, Ripple’s ongoing sales of XRP cannot be a securities offering.”
Moreover, in its last letter, Ripple established an affirmative defense that there is “no likelihood of future violations.” Hogan states in this regard:
Ripple is addressing the current and futures sales of its escrowed XRP when it is asking for a faster termination by the judge and added in the affirmative defense, talking about any future sales. The Cause is, Ripple is going to move for a summary judgement first as to its current and future XRP sales only and not the past sales, and they want to do it quickly.
Under U.S. law, a motion for summary judgment, even a partial one, can be filed at any time up to 30 days after the completion of all discovery. This means for the Ripple case, they can file the motion anytime up until sometime in September.
Ripple is going to file for partial summary judgement as to the current and future offering of XRP. And why is that so important? Because the case for Ripple is exponentially greater in summer 2021 than say in 2014 or 2015. And by moving for partial summary judgement on its third affirmative defense and winning, you all get the clarity you are looking for. And the rest of the case gets determined at some point later. But that part of the case is about money.
According to Hogan, the current status is where the SEC is “weakest.” Therefore, the SEC’s position will be that all Ripple sales, including the escrow account, must be viewed as a large sales offering stretching from 2013 to the present. In relation to this, the SEC will bring out the Kik Interactive case where two individual sales were considered as one “big whole”. Thus, the SEC will not “surrender without a fight.”
