- Such a ruling would depend on a clear distinction between early and later sales of XRP by Ripple.
- The XRP sales to Ripple’s ODL customers will also determine the fate of its status as a security.
Crypto lawyer Jesse Hynes believes that the judge overseeing the Securities and Exchange Commission’s lawsuit against Ripple may rule XRP as a non-security digital asset if a clear distinction is made between XRP’s early sales and how it is currently sold. Such a ruling would also be contingent on whether the court decides to investigate XRP’s status as a security.
Hynes, who previously served as the chief legal officer at Gala Games, took to Twitter earlier today to reflect on the latest developments in the SEC’s controversial lawsuit against Ripple. According to Hynes, the court will most likely find that the early-day sales of XRP violated U.S. securities laws. However, he added that the crypto lawyer believes that the judge will “determine that Ripple is no longer violating securities laws in how they are currently doing sales.”
The crypto lawyer stated that there is considerable uncertainty as to whether the court will decide to tackle the question of whether XRP is a security. However, given the SEC repeatedly bringing XRP’s status into question, the court may be compelled to decide the matter. In such an event, Hynes believes that the court will find that XRP cannot be considered an investment contract.
Fellow crypto lawyer Bill Morgan chimed in on Hynes’ Twitter thread and agreed with his assessment of the latest developments in the lawsuit. Morgan stated that a distinction between early and later sales of XRP can lead to a conclusion that digital assets can change from security to not being security.
Morgan highlighted that the argument for XRP’s status as a non-security digital asset may get bolstered by its sales to Ripple’s On-Demand Liquidity (ODL) clients. The crypto lawyer argued that the judge’s recent decision to deny the sealing of the Hinman documents showed that she understood the difference between programmatic and institutional sales of XRP. The Hinman documents contain internal communications and statements made by William Hinman, the SEC’s former Director of Corporation Finance, where he referred to Ethereum being a non-security asset.