The U.S. Securities and Exchange Commission (SEC) and Ripple Labs, along with other defendants, are awaiting a summary judgment from the district court that will determine whether XRP qualifies as a security. John Deaton, the lawyer representing XRP holders in the Ripple vs. US SEC lawsuit, has emphasized the importance of cases surrounding the investment contract claim.
Ripple Dismisses US SEC Theory
According to court documents, Ripple has argued in its preliminary statement for the summary judgment motion that the US SEC's claim involves interpreting the term “investment contract.” The theory of the case suggests that if an individual purchases an asset with the expectation of making a profit, the interests of the buyer and seller are partially aligned. However, Ripple argues that this is not the law.
Experts suggest that Ripple's argument is that the SEC's theory would require the court to accept that an investment contract can exist without a contract, rights, or obligations between the parties. However, the defendant argues that there have been no pre- or post-Howey cases without a contract or post-sale contractual agreement with investors.
The case in question will ultimately determine whether XRP is a security or not, and both Ripple Labs and the US SEC, along with other defendants, are awaiting the district court's summary judgment. XRP holder's lawyer, John Deaton, has brought up cases surrounding the investment contract claim in the ongoing Ripple vs. US SEC lawsuit.
According to John Deaton, the Amicus Curiae in the XRP lawsuit, the caselaw in the 2nd Circuit is stronger than that of the 1st, 5th, and 9th circuits. He mentioned that investment contracts have been found in cases outside the 2nd circuit without an underlying contract. Deaton further noted that some cases established that an investment contract can be a brochure that makes promises to investors. However, he pointed out that there has not been a single case in any circuit where an investment contract simply “popped up.”
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