XRP’s Meteoric Trading Volume Surge
XRP, which currently ranks as the seventh largest cryptocurrency by market capitalization, has witnessed an impressive surge in trading volumes, spiking by over 40% in the last 24 hours. This surge is closely linked to recent developments in the ongoing Ripple-SEC lawsuit, now in the appeals stage. Last week, the SEC announced its plans to submit its principal brief for the appeals process by January 15, 2025. Amidst this, legal discussions are fervently taking place, with various experts weighing in on XRP’s status.
XRP’s Classification Challenges
The legal battle surrounding XRP’s classification as a security continues to be a point of contention. Prominent legal voices such as Bill Morgan, Joe Sho, and James Farrell have all contributed their perspectives on the matter. Bill Morgan, known for his critical view of the SEC’s arguments, disputes claims by Joe Sho, who speculates that the Appeals Court might classify XRP as a security. Joe Sho suggests that the “de novo” review process allows the court to reinterpret XRP’s status, potentially aligning with decisions from other crypto cases, like Judge Rakoff’s ruling in the Terra case.
The Embodiment Theory vs. SEC’s Argument
Bill Morgan offers a more nuanced perspective, focusing on the “embodiment theory” and emphasizing XRP as an asset rather than a security. He argues that Judge Torres’s ruling, which determined that XRP is not inherently an investment contract, was appropriate because it distinguished between the asset itself and its transactional context. Morgan believes this approach is more coherent, despite differing from prevailing crypto case law or the SEC’s viewpoint. He highlights the SEC’s stance that XRP lacks inherent value, suggesting that any transaction involving it constitutes an investment contract, particularly within Ripple and potentially broader secondary markets.
Implications of the Appeals Court Review
James Farrell adds depth to the discussion, noting that the “de novo” review allows the Appeals Court to either adopt the “embodiment theory” or entirely reinterpret XRP’s classification. This gives the court the flexibility to follow Judge Rakoff’s approach from the Terra case, where assets like UST and LUNA were deemed securities based on their use in investment contexts. Such an interpretation challenges the initial district ruling on XRP. Although Morgan acknowledges the court’s ability to reevaluate, he cautions that considering XRP itself as a security would misinterpret the judge’s emphasis on distinguishing between the asset and transaction contexts.
The outcome of this legal debate could set a significant precedent for XRP and other cryptocurrencies. It raises crucial questions about whether digital assets are inherently securities or if they become so only within specific transactional frameworks. As the legal battle unfolds, the crypto community watches closely, contemplating whether progress is being made or if the discussion is merely going in circles.
