Ripple Chief Legal Officer cites case from the 70s, argues SEC knows XRP is not a security
- Ripple Chief Legal Officer Stuart Alderoty discusses Andy Warhol’s lithograph case to support the thesis that XRP is not a security.
- Alderoty argues that art lithographs, even when sold for investment, were not considered securities by the SEC.
- Alderoty’s views support the thesis of Ripple’s win in the US financial regulator’s lawsuit against the payment firm.
Stuart Alderoty, General Counsel and Chief Legal Officer (CLO) at Ripple, recently cited a Supreme Court verdict on Andy Warhol’s lithograph case to support his argument that “XRP is not a security.” According to Alderoty, the US financial regulator is well aware of the case, and this likely flips the outcome in payment giant Ripple’s favor.
Also read: XRP price likely to suffer a setback as Ripple bulls rethink strategy
Ripple’s CLO cites Andy Warhol’s lithograph case to strengthen Ripple’s argument
The prolonged legal battle between the US financial regulator, Securities and Exchange Commission (SEC), and remittance firm Ripple continues as the community looks up to the payment giant’s CLO for answers.
Alderoty reminded the community that as of May 19, the Supreme Court made it clear that facts from old cases do not apply mechanically. The party citing a fact from a prior case needs to adapt it to the new world, taking the underlying statute and the “soil” of the common law that comes with it.
Friday is for the legal nerds – yesterday in its Twitter opinion, the Sup Ct made clear that you don’t just mechanically apply factors from an old case. You must adapt them to a new world by looking at the underlying statute and the “soil” of the common law that comes w/ it. 1/2
— Stuart Alderoty (@s_alderoty) May 19, 2023
Ripple’s Chief Legal Officer said that the company's argument that the Howey test (that determines whether an asset is a security) carries the “soil” of common law in which an “investment contract” requires a contract for an investment that creates post-sale rights for the purchaser and obligations on the seller.
In the case of XRP Ledger’s native token XRP, there was no obligation on the seller to drive the value of the altcoin higher, post its sale. Alderoty believes this argument is sufficient and draws inspiration from Andy Warhol’s lithograph case from the 70s.
In the 1976 Supreme Court case, the SEC said that “art lithographs - even when sold for investment - are not securities when there are no post sale contractual obligations from the seller in favor of the buyer?”
The Sup Ct’s Andy Warhol lithograph case got attention last week. Did you know that in 1976 the SEC said that art lithographs - even when sold for investment - are not securities when there are no post sale contractual obligations from the seller in favor of the buyer? pic.twitter.com/S1mtaeHolc
— Stuart Alderoty (@s_alderoty) May 21, 2023
Does the SEC know XRP is not a security?
Alderoty’s example raises the question of whether the US financial regulator is aware that XRP does not qualify as a security. In case the answer is affirmative, it strengthens Ripple’s defense against the SEC and fuels a bullish thesis for a positive outcome for the cross-border payment remittance firm.
Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
