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Legal Expert Says SEC has “Strayed” from the Howey Test Original Meaning in Ripple Lawsuit

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The ongoing lawsuit filed by the Securities and Exchange Commission (SEC) against blockchain company Ripple has garnered a lot of attention from crypto and legal experts. Interested parties have given their opinions on the matter, with several experts not left out. 


J.W. Verret, an associate professor of law at George Mason University’s Antonin Scalia Law School, is the latest legal expert to give his analysis of the SEC v. Ripple lawsuit

Verret noted in an article published on Law360 that the SEC has consistently failed to give regulatory clarity on the grounds that the agency does not provide legal advice. 

SEC Abuse Howey Test

The legal expert said the SEC is abusing the Supreme Court’s Howey test, a case used to determine whether a transaction should be considered an investment contract in order to be registered with the agency. 

“The SEC’s case against Ripple Labs Inc. for sales of XRP tokens shows the limits of the Howey test,” Verret said. 

Commenting on the denial of the SEC’s motion to stop Ripple from using the Fair Notice Defense, Verret said the delay of the securities agency in charging Ripple seven years after conducting the sale of XRP shows that the regulator never gave the blockchain company a prior warning of violation. 

Verret suggested that the Howey test’s current application by the SEC may even be curtailed if the case stays on for too long because it has strayed away from the main elements of the Howey decision, which includes profit from others and common enterprise. 

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Albert Brown
Albert Brownhttps://thecryptobasic.com/
Albert Brown is a cryptocurrency investor and journalist who has been in the nascent space since 2017. His love and passion for technological innovations made him delve deeper into the world of blockchain and cryptocurrencies. As a journalist, Brown has written on several crypto-related topics that have been referenced by popular industry players like Tyler Winklevoss, Binance CZ, etc.

Disclaimer: The content is for informational purposes only, may include the author's personal opinion, and does not necessarily reflect the opinion of TheCryptoBasic. All Financial investments, including crypto, carry significant risk, so always do your complete research before investing. Never invest money you cannot afford to lose; the author or the publication does not hold any responsibility for your financial loss or gains.

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