New comments made from a magistrate judge in the United States District Court for the Southern District of New York bode well for Ripple in its ongoing lawsuit with the U.S. Securities and Exchange Commission (SEC), according to American lawyer Jeremy Hogan, a partner at the law firm Hogan & Hogan.
Hogan, who is not involved in the case, quoted Netburn as saying:
He went on to say:
“First, no matter what the SEC might try and argue, a currency and a security are by definition inapposite. A currency can be used to procur things of value. A security is an ownership interest in a common enterprise – they are 2 different things. The example you see in a lot of the case law is the laundry mat example. If you buy tokens for a laundry mat that hasn’t been built yet, you’ve bought a security. But once the laundry mat is built you now have a currency because you can buy something of value with the tokens.
“And that’s the second thing that the Judge disclosed is that she has bought into the argument that XRP has ‘utility,’ that, at least at the present time, that XRP can be used to do things and that is exactly what Ripple wants the Court to be thinking. When she first was talking and said ‘currency’ and ‘utility’ I thought she was Chris Larsen’s attorney or something – she sounded like she was arguing the case for them.“
Hogan also pointed out that “about halfway through the hearing” Judge Netburn “skeptically” told the SEC attorney that based on his theory, everyone who sold XRP are “selling illegal securities” and the response from the SEC attorney was:
“No, under Section4 , only Ripple and affiliates of Ripple can have sold XRP illegally.“
Hogan says thatis is important because it could mean that those crypto exchanges that have delisted XRP might able to get permission from the SEC to list XRP once again in the future.
However, Park Bramhall, senior counsel at Lowenstein Sandler LLP, told Coindesk that he does not agree with Hogan’s interpretation:
“What the SEC appears to be saying here is that, in its view, parties other than Ripple and its affiliates can rely on the exemption from registration provided under Section 4(a)(1) of the Securities Act for resales of XRP, and that exemption is only relevant if XRP is deemed to be a security.“
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