In a series of pointed criticisms leveled against the US Securities and Exchange Commission (SEC), pro-XRP lawyer Bill Morgan has highlighted what he views as repeated judicial victory against the SEC’s approach to crypto regulation by enforcement. His remarks draw on several recent cases where federal judges have questioned the SEC’s stance that digital tokens such as XRP constitute securities.

Bill Morgan’s analysis cites three distinct federal court rulings which collectively undermine the SEC’s long-standing assertion that cryptocurrencies should be treated similarly to traditional securities under the law. Morgan shared his comments via X, emphasizing the significance of these judicial opinions in shaping the future regulatory landscape of cryptocurrencies.

In the SEC vs. Ripple case, Judge Analisa Torres notably differentiated the digital currency XRP from traditional securities. Morgan remarked, “Judge Torres in SEC v Ripple told the SEC that the XRP token itself is not a security.” He also cited judge Torres who made clear: “XRP, as a digital token, is not in and of itself a ‘contract, transaction[,] or scheme’ that embodies the Howey requirements of an investment contract.

Further judicial skepticism arose in the SEC vs. Payward Inc. (Kraken case), where Judge William Orrick cautioned the SEC against conflating crypto tokens with investment contracts. Orrick’s statement was particularly striking: “Orange groves are no more securities than cryptocurrency tokens are,” he said.

Judge Orrick also warned the SEC to maintain a clear distinction between the crypto asset itself and the sales of the asset. “The SEC should be careful going forward to maintain this distinction. To the extent it tries to argue that the individual tokens that form the basis of transactions on Kraken are investment contracts, or are themselves securities, its argument cannot proceed.”

Morgan also referenced the SEC vs. Binance case, where Judge Ketanji Brown Jackson dismissed the SEC’s theory that a crypto token is the embodiment of an investment contract, clarifying that it could, under certain circumstances, be merely the subject of an investment contract.

“In SEC vs Binance Judge Jackson completely rejected the SEC’s embodiment theory that the crypto token is the embodiment of an investment contract rather than possibly in certain circumstances being the subject of an investment contract,” Morgan noted.

His critique culminates in a rhetorical question that challenges the SEC’s current regulatory framework: “How many more judicial comments are needed of this kind before the SEC jettisons the discredited embodiment theory or any forlorn hope the courts will ever regard the crypto asset itself as a security?”

Remarkably, it does not seem to be enough so far. In a highly controversial action, the SEC sent a Wells notice to the NFT marketplace OpenSea on Wednesday, alleging that the NFTs traded on the platform could be classified as unregistered securities.

At press time, XRP traded at $0.5605.

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