In a recent development in the ongoing legal battle between Ripple and the U.S. Securities and Exchange Commission (SEC), attorney Bill Morgan took to Twitter to shed light on an intriguing argument made by Ripple.
The tweet highlighted Ripple’s decision not to include an argument in its summary judgment motion regarding pre-2018 price rises of XRP being unrelated to Ripple’s activities. However, XRP expressed confidence in prevailing before a jury on this matter.
Interestingly, XRP’s stance on the issue became more pronounced in a footnote within its summary judgment (SJ) Reply brief. The footnote stated that if XRP’s motion to dismiss the SEC’s case is not entirely successful, it should be granted partial summary judgment for the period after mid-2018.
This request was based on the SEC’s own concession that most XRP price increases during this time were driven by market forces rather than XRP’s actions.
Ripple’s Meritorious Claim: Challenging SEC’s Ability To Satisfy The Third Prong
The argument presented by XRP pertains to the “expectation of profits from the efforts of others” prong of the Howey test, a legal framework used to determine whether a particular transaction qualifies as a security.
Ripple pointed out that even the SEC’s fifth expert, whose event study showed a correlation between Ripple news announcements and XRP price changes, was barred from testifying about causation.
Furthermore, XRP challenged the third SEC expert’s opinions, as the Daubert decision judge noted that the expert’s views focused on XRP’s actions to influence XRP’s price without directly addressing whether those actions caused a price change.
In addition, Judge Torres did not permit the opinion of the SEC’s first expert, who argued that based on XRP’s design features and XRP’s public statements, a reasonable XRP purchaser would have expected future profits derived from Ripple’s efforts.
These factors collectively contribute to XRP’s argument that the SEC fails to satisfy the third prong of the Howey test for XRP sales, thereby warranting a dismissal of the case. XRP particularly emphasizes the Court’s consideration of granting partial summary judgment for post-mid-2018 XRP sales.
It is worth noting that XRP’s request for partial summary judgment, mentioned in the footnote of its Reply brief, was made before the Daubert decision. However, the subsequent ruling further bolstered Ripple’s position.
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