The XRP community is reacting to an argument made by the US Securities and Exchange Commission (SEC) in its ongoing legal battle against Ripple Labs. The SEC argued that XRP has no value, which has raised concerns among XRP supporters who believe that the regulator is attempting to tarnish the token’s reputation.
Bill Morgan, a pro-XRP legal expert, described the SEC’s argument as “negative and reactionary.” He believes that the SEC either lacks an understanding of XRP or intentionally wants to hinder Ripple’s progress as a decentralized payment system.
The SEC initially claimed that XRP has no intrinsic value in its memorandum of law opposing Ripple’s motion for summary judgment. Additionally, the regulator argued against Ripple’s two arguments in its summary judgment brief, stating that XRP also lacks intrinsic value.
Ripple had argued that investors purchased XRP as a payment token rather than as an investment. Morgan suggests that the SEC “perceived” Ripple’s argument as an attempt to equate buying XRP to purchasing assets like gold without considering it as an investment. The SEC countered by stating that even assets with intrinsic value, like gold, can still be sold as investment contracts.
Regarding Ripple’s argument on common enterprise as a qualification for a security, the SEC emphasized that the key factor is whether an asset is offered and sold as an investment or a regular asset. The regulator reiterated that assets, regardless of intrinsic value, can be considered investment contracts.
Morgan observed that Judge Torres classified digital assets with commodities in her ruling, which may have displeased the SEC. This is likely why the Commission again emphasized the lack of intrinsic value in XRP in its motion for leave to file an interlocutory appeal.
The argument made by the SEC that XRP has no intrinsic value is significant for the crypto community. Morgan suggests that the SEC’s aim is to entice token issuers to find utility for their tokens. This satisfies the third prong of the Howey test, as investors rely on the issuers’ efforts to increase the value of the cryptocurrency.
Furthermore, the SEC seeks to distinguish XRP from commodities and asserts that XRP has no intrinsic value upon creation. If this argument holds, it could be applied to all cryptocurrency tokens.
This strategy by the SEC aims to portray crypto tokens as an asset class with no intrinsic value. This portrayal could dissuade potential buyers from investing in these assets.
It is important to note that this article provides insights into the ongoing legal battle between the SEC and Ripple Labs, highlighting the arguments made by both parties. The views expressed by Bill Morgan and the interpretation of the SEC’s motives are those of the author and may not reflect the opinions of all XRP community members. The outcome of the legal battle will ultimately determine the implications for the XRP community and the broader crypto industry.