Ripple's XRP (XRP) is not a security because it does not fit the definition of an "investment contract," the "only" legislative definition that could "possibly" fit, according to Jeremy Hogan, a partner at law firm Hogan & Hogan.
in a series of tweets On April 9, Hogan explained that, in his opinion, XRP could only be considered a security under the definition of โinvestment contractโ as it does not fit the other definitions of securities, such as stocks or bonds.
Hogan argues, however, that the United States Securities and Exchange Commission has not demonstrated an implicit or explicit investment contract in his lawsuit against Ripple.
The #1 reason why XRP is not a security (a thread).
First, by the legislative definition of a security, XRP can only POSSIBLY fit the definition of an "investment contract." It is not a stock or a bond, etc.
Even the SEC grants this: "investment contract." pic.twitter.com/n9g7ZEos2n
โ Jeremy Hogan (@lawyerjeremy1) April 9, 2023
"Instead, it argues that the purchase agreement is all that is required, and that's all it proves," Hogan said.
โBut that argument tears the 'investment' out of the 'contract' as a simple purchase, without more, [there] it cannot be an 'investment contract', it is just an investment (like buying an ounce of gold) as Ripple is under no obligation to do anything except transfer the asset," he added.
He The SEC launched a lawsuit in December 2020alleging that Ripple illegally sold its XRP token as an unregistered security.
Ripple has long disputed the claim, arguing that it does not constitute an investment contract under the Howey's test โ a legal test used to determine whether a transaction qualifies as an investment contract. It was established in 1946 by the Supreme Court of the United States in the case SEC v. w.j.
Hogan further argues that all of the "blue sky" cases, on which the Howey case relies to define an "investment contract", involved some form of contract with respect to the investment.
Related: Ripple CEO: XRP Lawsuit Settled in June, SEC Conduct 'Disgraceful'
"Indeed, how can a person 'reasonably trust' an offeror to make a profit when they have no legal recourse when that offeror defaults?" he said.
"They can't. Even the oft-cited four-part test implies that a 'contract' of some kind is required."
Hogan says that the fact of the matter is not whether Ripple used the money from the sale of XRP to finance its business, but whether the SEC has shown that there was an implicit or explicit "contract" between Ripple and XRP buyers in relation to your "investment". ."
"There was no such contract," Hogan said.
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