2023-8-29 14:00 |
The XRP community has picked up on an argument by the US Securities and Exchange Commission (SEC) in its long-running legal battle against Ripple Labs that its native token has no value. For one, they believe the regulator is trying to smear the token’s reputation with this argument.
Is SEC Trying to Malign XRP?Pro-XRP legal expert Bill Morgan has tagged this view by the SEC as “negative and reactionary.” He believes that the SEC either doesn’t understand XRP or deliberately wants to hinder Ripple’s progress as a decentralized payment system.
The SEC first claimed that XRP has no intrinsic value in its memorandum of law in opposition to Ripple’s motion for summary judgment. Furthermore, the regulator argued that XRP had no intrinsic value in opposition to Ripple’s two arguments in its summary judgment brief.
Ripple had argued that investors had made payment for the tokens rather than as an investment of money. Concerning this, Morgan believes that the SEC “perceived” that Ripple was trying to compare the purchase of XRP to how people buy assets such as gold without seeing it as an investment of money.
The SEC had countered Ripple’s argument by stating that assets like gold, which had intrinsic value, unlike XRP, could still be sold as investment contracts.
In response to Ripple’s argument on common enterprise as a ground for qualifying an asset as a security, the SEC argues that what matters most is whether an asset was offered and sold as an investment or an ordinary asset. The regulator once again reiterated that sales of assets, whether it has intrinsic value or not, can be investment contracts.
Morgan noted that Judge Torres seemed to have classified digital assets with commodities in her ruling, which most likely displeased the SEC. He believes that is why the Commission again highlighted that XRP had no intrinsic value in its motion for leave to file an interlocutory appeal.
Why It Matters To The Crypto CommunityMorgan further explained that the SEC stating that XRP has no intrinsic value is a ploy by the regulator to lure token issuers into “finding” utility for their tokens. This is because it is something that could satisfy the third prong of the Howey test as it will be taken that investors are relying on the efforts of these issuers to increase the crypto’s value.
He further stated the SEC has sought to distinguish XRP from assets like commodities that are not exactly created by a seller and stated that XRP has no intrinsic value when created. If this argument should stick, it could apply to all crypto tokens.
By doing this, the SEC is likely advertently trying to portray crypto tokens as an asset class with no intrinsic value. That could easily deter those looking to purchase these crypto assets.
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