Morgan says XRP investors rely on Ripple’s legal efforts to win the SEC in the ongoing lawsuit.
Bill Morgan, an Australian-based pro-XRP lawyer, said the Securities and Exchange Commission “may be correct” in one of its claims against Ripple.
In its summary judgment motion, the SEC alleges that many investors purchased XRP hoping to make profits through Ripple’s efforts.
Interestingly, the SEC’s expert admitted that Bitcoin and Ethereum gains account for 90% of XRP returns from mid-2018 to date. Despite the expert’s analysis, the SEC still insists that XRP investors rely on Ripple’s efforts for gains.
Morgan further asserts that if the SEC expert’s analysis is correct, it then means that Ripple is responsible for allowing BTC and ETH price movements to control the XRP price. Also, Ripple controls the XRP price as a centralized actor.
“But if the SEC’s expert is correct, you would need to posit that Ripple is allowing in some way XRP’s price to be controlled by price movements of Bitcoin and Ethereum to maintain Ripple is controlling the price as a centralized actor.”
Morgan Backs One SEC Claim
According to Morgan, the regulator correctly asserts that investors may rely on Ripple‘s efforts to make gains. Investors are not relying on Ripple’s business efforts but on the company’s legal efforts in winning the lawsuit against the SEC to make gains on XRP.
“Paradoxically, the SEC may be correct about investors relying on Ripple’s efforts but not because of Ripple’s business efforts or sales of XRP, but its legal efforts defeating the SEC’s lawsuit should it be successful,” he said.
Morgan added that investors’ reliance on Ripple’s influence to rally the XRP price has nothing to do with the efforts the Judge in the Howey case had in mind.
Other Pro-XRP Lawyers Think SEC Argument is Flawed
Morgan is not the only XRP enthusiast who has commented on the SEC’s argument against Ripple. The argument borders around the third and fourth prongs of the Howey Test, a legal test that determines whether an asset qualifies as an investment contract.
Aside from Morgan, pro-XRP lawyers like John Deaton and Jeremy Hogan have also commented on the argument. The duo believes that the SEC’s reliance on the argument could see it lose the summary judgment against Ripple.
The rationale behind the assertion is that the SEC did not provide relevant facts to back the argument. Instead, the SEC pointed out that Ripple sent brochures to 100 potential investors in 2014.
Deaton recently explained that Judge Torres could consider Ripple’s action an offering. Ripple’s counter-argument that there was no underlying contract to constitute to qualify the move as an investment contract did not seem appealing to Deaton. The CryptoLaw founder said the argument would pass in the Second Circuit and Supreme Court. Judge Torres may not buy the argument, Deaton said.
He, however, thinks the blockchain company has a good chance of winning the lawsuit because the SEC’s argument is broad.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
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