The ongoing legal battle between block chain firm Vibe and the Securities Market Commission (SECOND) continues to see new developments, with both sides identifying areas of weakness in their opponent's argument.
In the latest update, Stuart Alderoty, Ripple's legal director, in a cheep on May 13, he criticized the SEC's stance on the "common enterprise" argument, citing the regulator's failed argument in the 1946 "Howey" Supreme Court case.
In the case, the SEC argued that investment in a "common company" it was not necessary if there was a "community of interest", which was rejected by the Supreme Court. Accordingly, Alderoty noted that the SEC was wrong then and now with respect to XRP.
The legal officer argued that the common interest is not similar to the common enterprise and that the SEC is wrong to say that all XRP the holders are involved in a common enterprise.
Misreading the Howey test
Alderoty has accused the regulator of trying to misinterpret the Howey test. In particular, the disagreement centers on the โcommon companyโ aspect of the test, with Ripple lawyers claiming that the SEC is expanding the definition beyond its original intent.
As the legal battle enters its third year, the regulator has argued that XRP's fungibility serves as evidence of a joint venture. The SEC maintains that all units of XRP are exchangeable and that their value fluctuates together, forming part of a common enterprise.
Reacting to Alderoty's tweet, crypto lawyer Bill Morgan He suggested that the SEC is betting on an old point that the Supreme Court had already rejected.
โTo put this and Stuart's tweet in context, the starting point is to acknowledge that the SEC is trying to massively stretch the Howey test to cover cryptocurrencies on the grounds that the Court intended the test to be flexible. The SEC does this in relation to cryptocurrencies by taking an expansive view of the common company that allows it to avoid the word 'company' and the need to link it to specific transactions and instead focus on the adjective common,โ he said.
Summary judgment uncertainty
As the โHoweyโ case continues to be a source of contention between both parties, the crypto community is anticipating a summary judgment date for the ongoing legal dispute.
In short, the SEC accused Ripple of selling unregistered securities in the form of XRP tokens. Speculations abound that the matter may be resolved in the first half of the year. Several potential outcomes have been suggested, but Ripple has secured a few minor victories throughout the proceedings.
Meanwhile, Ripple CEO Brad Garlinghouse appeared at the XRP Las Vegas 2023 event, expressing his gratitude towards the XRP community for their unwavering support during the legal battle.
Currently, XRP, which remains at the center of the dispute, is trading at $0.43 with a loss of less than 0.5% in the last 24 hours.
Featured Image via XRP YouTube plan
