In a surprising turn of events, XRP enthusiast and lawyer Bill Morgan has taken to Twitter to reveal a fact that could have significant implications for the Ripple lawsuit.
In a recent filing, the Securities and Exchange Commission’s (SEC) own expert has admitted that Bitcoin and Ethereum’s price movements could explain up to 90% of XRP’s price movements since mid-2018.
Morgan’s tweet included a screenshot of the filing, where the SEC’s own expert conceded that “bitcoin and ether returns can explain as much as almost 90% of XRP returns.”
However, despite this significant revelation, the SEC offered no serious response and simply denied the statements’ relevance in establishing legal rules.
According to Morgan’s Twitter thread, this further reinforced the fact that the narrative that Ripple’s large percentage holding of the tokens means the XRPL is centralized and XRP is security persists.
However, if the SEC’s expert is correct, then it would be untenable to posit that Ripple is allowing the token’s price to be controlled by Bitcoin and Ethereum’s price movements to maintain control as a centralized actor.
Morgan’s argument is further strengthened by the fact that the market price movements of Bitcoin similarly influence most other cryptocurrencies’ prices.
Moreover, the SEC has claimed that Ripple has taken several measures to support the price of Ripple’s token, not increase it. While the SEC does not state whether these measures worked, the volume of all Ripple sales since 2013 has been a tiny percentage (less than 1%) of the total market sales of XRP.
The SEC, through its expert, is trying to show that Ripple’s announcements influence XRP’s price, not to prove that the XRPL is centralized, but to prove that XRP buyers and holders expect profits from Ripple’s efforts.
However, the paradox here is that the SEC may be correct about investors relying on Ripple’s efforts, not because of Ripple’s business efforts or sales of XRP, but its legal efforts in defeating the SEC’s lawsuit if successful.
XRP & the Ripple Lawsuit: The Debate
In response to Morgan’s tweet, the community noted that Ripple had mentioned in one of their filings for the Judge to look at the XRP price post-2018 as related to market movement and unrelated to Ripple.
This point further emphasizes the fact that if almost all cryptocurrencies follow Bitcoin’s price movement, then by theory, pretty much no cryptocurrency is a security. Since investors then rely on Bitcoin and no centralized entity to profit, Bitcoin is a non-security.
Many individuals responded to Morgan’s tweet, expressing their concerns about the level of corruption in DC influencing the direction of crypto in the US. They wondered if the tentacles of corruption have gripped Judge Torres, and if so, then all legal analysis would be irrelevant.
Nevertheless, the recent revelation in the Ripple lawsuit adds to the growing debate surrounding classifying cryptocurrencies as securities. It also highlights the need for regulators to provide clear guidelines to avoid confusion or misinterpretation of the laws.
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