Jeremy Hogan presents compelling arguments why XRP should not be classified as a security
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Currently awaiting the decision of the Ripple SEC lawsuit, attorney Jeremy Hogan has taken to Twitter to present a compelling argument as to why XRP does not qualify as a security.
In a thread of tweets, Hogan explains that XRP can only “possibly” fit under the definition of an “investment contract” under the legal definition of security.
XRP is neither a stock nor a bond, and he says that even the SEC concedes that XRP can only be viewed as an “investment contract.”
With this in mind, Hogan goes on to say that an “investment contract” analysis is driven by the “Howey” case and its descendants. The ‘test’ in this case (investing in a joint venture with the expectation of gains from the efforts of others) came in response to a lower court finding that a ‘speculative’ investment was required.
He highlights an important fact: The Howey case did not focus on the “contract” portion of the “investment contract.” Instead, the “contract” was deemed necessary in its response to the lower court and had addressed the “contract” portion of the test just prior to the delivery of the Howey report.
While this may seem legal formality, according to Hogan, the question is whether the SEC has proven that there was either an implicit or explicit “contract” between Ripple and XRP buyers regarding their “investment.”
The simple basis of Hogan’s argument is that the SEC has not argued that there was an implicit or explicit investment treaty.
Instead, it makes an argument that tears the “investment” out of the “contract.” The SEC argues that the bill of sale is all that is required and that is all it proves. He says that a simple purchase simply cannot be an “investment contract.”
There remains only one investment, like buying an ounce of gold, and Ripple is under no obligation to do anything except transfer the asset. He further adds that in the case of Ripple, there was no such contract and therefore XRP cannot be classified as a security.
Hogan concludes that the term “safety” is not intended to protect a potential investor from making the wrong decision. Securities laws only require that vendors provide certain information about the contract that the buyer is entering into.