Ripple Vs SEC: Uncertainty Looms Over XRP’s Security Classification

The Ripple Vs. SEC lawsuit is reaching its final stage, and there is significant anticipation for the final ruling within the entire crypto industry. The lawsuit claims that Ripple sold securities without proper registration, arguing that XRP should be categorized as a security rather than a cryptocurrency.

The outcome of this lawsuit could establish a precedent in the crypto industry and offer much-needed clarity on regulations.

However, a prominent lawyer has recently expressed his opinion, stating that Judge Torres will not rule on whether XRP is a security. 

This comes as a shock to many, read on for more details. 

Judge Torres Might Not Rule on Whether XRP is Security

In a recent tweet, lawyer Bill Morgan, based in Australia, raised concerns regarding Judge Analisa Torres’ decision not to address the question of whether XRP is a security in the ongoing lawsuit between the SEC and Ripple.

Attorney Morgan highlighted that Judge Torres’ ruling on the Daubert motion filed by both parties indicates the specific matter she is likely to emphasize in the forthcoming summary judgment decision.

The lawyer expects Judge Torres to rule on whether XRP is a security, but he is afraid that she has already stated that she will not.

Lawyer’s Opinions on Judge Torres’ Decision Regarding XRP’s Security Status

Bill Morgan has outlined two possible scenarios regarding the ruling. If Ripple loses the case and is required to pay penalties and disgorge profits from XRP sales, the judge may examine whether XRP is a security. 

If Ripple wins the Daubert motion by proving that their sales of XRP were not considered investment contracts, it may eliminate the need to determine if XRP itself is a security.

The main issue revolves around whether Ripple’s sales qualify as investment contracts. If the judge rules in favor of Ripple on this matter, the question of XRP’s security status may become irrelevant.

Factors Influencing Judge Torres’ Consideration of XRP Secondary Market Sales

Attorney Hogan put forth three points that could lead Judge Torres to consider the matter of XRP secondary market sales. Firstly Ripple may request the SEC’s permission to clarify in the final judgment that the summary judgment does not cover XRP secondary market sales.

Secondly, Judge Torres might address concerns raised by various “friends of the court,” including a brief submitted by Deaton representing over 75,000 XRP holders, regarding the secondary market transactions of XRP.

Lastly, if Ripple loses the lawsuit, Judge Torres may be required to address the issue during the penalty stage when a disgorgement order is being drafted.