Ripple CTO David Schwartz assures Ripple does not conduct ODL-related sales with a US nexus, noting that he believes ODL sales can still take place from alternate sources.
Following the ruling of XRP as non-security by Judge Analisa Torres, concerns have emerged about the classification of ODL-related sales. Ripple’s Chief Technology Officer (CTO), David Schwartz, took to Twitter to shed light on the matter.
Schwartz said they are still trying to understand and navigate this legal matter. Currently, they do not have any ODL-related sales with a US nexus. However, he mentioned that even if they cannot conduct those sales in the US, it wouldn’t be a significant problem for Ripple.
We're still figuring this out. We don't currently have ODL-related sales with a US nexus and not being able to do so is not really a huge deal. We can still do ODL in the US so long as XRP is never sourced from Ripple.
— David "JoelKatz" Schwartz (@JoelKatz) July 14, 2023
He explains that they can still operate ODL within the US as long as the XRP used in these transactions does not come directly from Ripple. This means that if they ensure that XRP is obtained from other sources, they can continue to use ODL technology for cross-border payments within the US.
The Bone of Contention
The discussion around ODL-related sales was prompted by a tweet from Leonidas, a prominent figure in the crypto community, who referenced Ripple’s quarterly reports. Leonidas noted a shift from institutional and programmatic sales to ODL-related sales.
Notably, institutional sales were replaced by ODL-related sales. Leonidas sought clarification on whether these ODL-related sales could now be considered securities based on the summary judgment.
Ripple (according to its quarterly reports) used to have institutional and programmatic sales. Programmatic sales stopped in Q4 2019 while institutional sales were replaced by ODL-related sales.
According to the summary judgment, are ODL-related sales now considered securities? pic.twitter.com/dA25uOQp5U— Leonidas (@LeoHadjiloizou) July 13, 2023
Notably, the US court ruled in favor of the US Securities and Exchange Commission (SEC) that Ripple’s XRP to institutional investors is security, representing the basis of Leonidas’ concern about ODL-related sales.
Further Clarifications
In response, an XRP enthusiast expressed skepticism, asserting that ODL sales serve a utility purpose and should not be classified as securities. He also speculated that institutional sales likely occurred during a previous period.
Adding to the discussion, XRP Myth Buster NFTs highlighted a recent statement by Stuart Alderoty, Ripple’s Chief Legal Officer. In the tweet, Alderoty clarified that the court’s finding regarding an investment contract specifically pertained to past direct XRP sales made to institutional clients.
Alderoty further clarified that future court proceedings would solely focus on these institutional sales, per the court’s order.
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