Paul Grewal, Coinbase’s Chief Legal Officer, and John Deaton, a well-known lawyer advocating for XRP holders, delved into a critical aspect of Ripple’s ongoing legal battle with the Securities and Exchange Commission (SEC).
Their conversation centered around the relevance of a landmark 1994 court decision, Revak v. SEC Realty. This case from the Second Circuit is now coming into focus as a potentially influential factor in determining the outcome of Ripple’s current legal challenges with the SEC.
Grewal and Deaton Discuss Revak v. SEC Realty’s Impact on Ripple Case
Paul Grewal, Chief Legal Officer at Coinbase, recently highlighted key aspects of the Revak v. SEC Realty case and its implications for defining an investment contract in the context of ‘ecosystem’ access.
Grewal pointed out the importance of the Howey test in this context, emphasizing that the mere connection between investor fortunes and promoter efforts doesn’t automatically meet the test’s criteria. He noted that for an investment to be considered a common enterprise under Howey, it must rely significantly on the promoter’s expertise, a point the court in the Revak case underlined.
John Deaton, sharing Grewal’s view, drew connections between the Revak case and ongoing legal cases involving companies like LBRY, Ripple, and Coinbase.
He underlined the importance of jurisdictional aspects, noting that the Second Circuit’s ruling in the Revak case is particularly relevant to Ripple and Coinbase, as it could influence the interpretation and application of laws in similar cases.
Latest Developments in SEC vs. Ripple Lawsuit
In July 2023, Judge Analisa Torres in the SEC vs. Ripple case declared that while the XRP token is not considered a security when sold on retail exchanges, it is classified as such in transactions with institutional customers. This distinction has added a layer of complexity to the ongoing dispute between Ripple and the SEC.
Recently, the SEC escalated the conflict by requesting a court order to compel Ripple to provide audited financial statements for 2022 and 2023, along with details of its institutional XRP sales since the lawsuit began. Ripple’s legal team rejected this demand, stating that the request was untimely and irrelevant to the upcoming trial scheduled for April.
SEC Intensifies Investigations
In response, the SEC, through a letter dated January 23, countered Ripple’s dismissal. The Commission argued that Ripple did not demonstrate any prejudice from producing recent financial statements.
Additionally, the SEC referenced a previous ruling, suggesting that a defendant’s wealth is a crucial factor in determining the size of a penalty for deterring misconduct.
The outcome of this lawsuit is highly anticipated, as it holds significant potential consequences for the XRP ecosystem. Market experts speculate that a positive resolution for Ripple could pave the way for prominent investment managers to seek approval from the SEC for spot XRP exchange-traded funds (ETFs), potentially broadening the scope and appeal of XRP investments.
Ripple’s Strategic Hiring Signals Potential Move Towards Institutional DeFi
As Ripple prepares for a potential application for a spot XRP ETF with the SEC, the company is making strategic moves in its workforce. Ripple is currently hiring for a senior managerial position in the institutional Decentralized Finance (DeFi) sector..
The Senior Manager, Business Development (Institutional DeFi) role, based in London, is part of Ripple’s ‘Ripple X’ team. This team focuses on partnering with enterprises and institutions to develop solutions and use cases using the XRPL Ledger and XRP.
A key responsibility of this role will be to advance initiatives related to cryptocurrency ETFs, collaborating with internal trading teams and partners, further indicating Ripple’s commitment to expanding its influence in the institutional DeFi and ETF spheres.
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