Pro-XRP Lawyer Offers Key Solution To Ripple’s Legal Woes Against SEC

Jeremy Hogan, a pro-XRP lawyer, has discussed the issue of secondary market sales and its potential impact on the Ripple vs. the US Securities and Exchange Commission (SEC) lawsuit. 

The outcome of this case is crucial for XRP holders, as it will determine whether the asset is deemed inherently a security. If the issue of secondary market sales is not addressed, it could impact the relisting of XRP on exchanges like Coinbase.

The SEC lawsuit suggests that XRP is a security, like a share of stock. However, the SEC’s requests of the court in the lawsuit do not explicitly request anything that would confer this status on the asset. This leaves the issue of secondary market sales in question.

Disgorgement Order Could Force Ripple vs. SEC Case To Address Secondary Sales Issue

The SEC has charged Ripple with violating securities laws by selling XRP as an unregistered security. If Ripple is found to have violated securities laws, it could be required to pay disgorgement, which would oblige the company to give up profits gained through illegal or unethical means.

However, Hogan suggests that Ripple could obtain an agreement from the SEC to include language in its final decision that the judgment does not cover secondary sales. 

Hogan argues that the court must determine who receives the funds taken from Ripple in a disgorgement order. Disgorgement is a legal remedy that requires a defendant to give up profits gained through illegal or unethical means.

Furthermore, the Pro-XRP lawyer suggests that Ripple could argue that only actual purchasers from it directly, not secondary purchasers, should receive their investment back in a disgorgement order. This argument is based on the SEC v. Wang case, in which a court ruled that disgorgement should only be paid to those who purchased a security from the defendant.

If the court agrees with Ripple’s argument, it would mean that only those who purchased XRP directly from Ripple would be entitled to receive their investment back. This would exclude secondary market purchasers, such as those who bought XRP on exchanges.

This could be a positive outcome for Ripple, as it could limit the financial impact. It could also help to clarify the legal status of XRP, as it would confirm that XRP is not inherently a security.

SEC’s Admission On Token Status In LBRY Case Could Have Positive Implications For XRP

In a past hearing in the Library (LBRY), blockchain-based file-payment network vs. SEC lawsuit, the US district court heard oral arguments on the application of remedies. The judge had to decide whether a crypto asset that allows the owner to send instructions to a network can embody an investment scheme by a company. The SEC wanted the judge to issue a broad injunction against the sale of the LBRY token, in which the token becomes the security.

However, the hearing was good news, especially for XRP. John Deaton, an Amicus Curiae in the XRP lawsuit, also submitted an amicus brief in the LBRY case. The SEC lawyer in the LBRY lawsuit conceded that the secondary market sales of LBC tokens do not constitute a security. The judge ruled that the secondary market transactions of LBRY tokens by people unaffiliated with no investment intent in the LBRY case are legal.

The LBRY case sets a precedent that could benefit Ripple and XRP holders, confirming that secondary market transactions do not constitute securities. If the Ripple vs. SEC judge follows a similar line of reasoning, it could mean that XRP is not inherently a security, as secondary market sales are an essential part of cryptocurrency trading and do not represent an investment scheme by the company.

Featured image from iStock, chart from TradingView.com