TechCrunch founder Michael Arrington is giving his take on the U.S. Securities and Exchange Commission’s (SEC) case against Ripple.
In a new interview with Layah Heilpern, Arrington addresses the Howey test, which was established in a Supreme Court case and determines whether certain transactions qualify as investment contracts subject to securities laws.
Arrington says he believes the test is outdated and irrelevant in the digital age.
“Whether or not something is a security, even asking that question, just plays into the hands of the SEC. They want everybody using their definitions to decide what is and isn’t a security.
We buy cryptocurrencies with the hope of making money when they’re denominated in dollars. We do that because we don’t believe in dollars anymore. Is that a security? Maybe, I don’t know. It depends because it’s not just about, ‘Is it a security?’ and then the conversation is over. It’s, ‘Is it a security?’ and then if it is, which is an entirely a legal definition, then the SEC can really put the hurt on you.
I think it’s all securities in the sense of, we’re all buying these things because we’re trying to get into assets that will protect us from what the dollar is doing. But no, we look at the Howey Test, the hundred-year-old test that’s absolutely useless in a modern world. It’s ridiculous…
Do I think [XRP is] a security? From the point of view of the SEC, no. From the point of view of me, it just doesn’t matter. What’s a security and what isn’t a security is totally irrelevant and it really just comes down to whether you only allow rich people to trade an asset or do you allow everybody to trade an asset.”
Ultimately, Arrington says that he hopes the lawsuit can give cryptocurrency companies clarity on how they can legally operate in the US.
“I’m hoping that we get some regulatory clarity from this, but what I believe is the SEC wants Ripple dead to put a feather in their cap. Now, that’s pure speculation based on nothing other than speculation.
Also, the SEC is an entity that changes over time and is changing right now in terms of SEC chairs, and so what the SEC wants over time is largely going to be dependent on what the executive branch wants over time and the executive branch just changed so I have no idea… I believe the SEC probably wants us to go to trial and if it goes to trial we’ll see what happens but I don’t know.”
Arrington is the founder of Arrington XRP Capital, a digital asset manager that launched in 2017 and utilizes XRP to invest in blockchain technology.
XRP Lawsuit: SEC aims to make XRP skip the bull run with an Expert Discovery Extension Appeal
The latest update in the XRP lawsuit saw the SEC file a letter requesting the Court to extend the expert rebuttal report deadline to November 12, 2021, and the expert discovery deadline to January 14, 2022, from the former date of November 12, 2021. The plaintiff noted that the extension will allocate both parties sufficient time to prepare rebuttal reports and depose a minimum of 14 expert witnesses.
Ripple Opposes SEC extension appeal to save XRP from an isolated bear run
While consenting to the extension of the rebuttal report deadline until November 12, Ripple opposes the January 14 deposition deadline to avoid the case from stretching long enough for XRP to entirely miss the bull run. Furthermore, Ripple also intends to file an opposition to this letter motion on October 18, 2021.
The SEC offered a compromise to Ripple, preponing the expert discovery extension to December 22, but the defense has rejected that offer as well. Ripple argues that the extension would “would likely impact the briefing schedule for summary judgment motion[s].”, as post-December 10, 2021, the Thanksgiving holidays will commence the holiday season.
SEC supports extension appeal with pending motions
The SEC objects that the case is even less ready for summary judgment motions as expert discovery has commenced with an incomplete factual record. The commission noted that on September 1, 2021, Magistrate Judge Netburn granted the SEC’s motion to compel Ripple to produce certain instant messages among its employees, but Ripple has not completed its production of responsive documents and has not provided any timetable by which it will be complete. Along with the incomplete discovery of a granted motion, the plaintiff states that the parties have a total of four pending discovery motions before Magistrate Judge Netburn. The plaintiff claims that even if one motion is granted, the parties will require an additional extension to proceed with the discovery.
“If Magistrate Judge Netburn grants any of the pending motions to compel, at minimum, the parties would need additional time to review and produce the documents at issue…The SEC’s proposed extension is fair and reasonable under the circumstances and should be granted for good cause.”, stated the SEC.
XLM May Get in Trouble If XRP Deemed a Security: XRP Researcher
A researcher from the XRP community believes that XLM and Stellar may get in trouble should the SEC deem XRP a security
Researcher Leonidaz Hadjiloizou has posted a tweet, in which is asks the opinion of the XRP community about which side in the Ripple-SEC legal battle the company’s co-founder and former CTO Jed McCaleb would take, if he were to do it.
According to Hadjiloizou, should the SEC win and XRP is deemed a security, then Jed and his company Stellar which he created as a rival to Ripple will be in for hard times. If the court rules that XRP is a security, then McCaleb broke the law by selling these potentially unregistered securities – 9 billion of them that he received from Ripple as compensation as part of the Settlement Agreement.
What is most likely? Jed testifies as an expert witness for Ripple or the SEC?
PS1:If he believed XRP is a security then he broke the law by selling unregistered securities after the lawsuit was filed.
PS2:XLM might get in trouble if XRP is deemed a security on a technical lvl.— Leonidas (@LeoHadjiloizou) October 16, 2021
Besides, Hadjiloizou says that if XRP is announced a security, then the native token of Jed’s Stellar, XLM, may also get in trouble and, perhaps, face similar accusations.
So far, no legal action has been filed by the SEC against Jed McCaleb, even though he co-founded Ripple Labs together with Chris Larsen. The latter and the CEO Brad Garlinghouse, along with Ripple Labs, are the defendants in this legal case of the SEC against Ripple.
Jed has been selling his 9 billion XRP in parts, however, he has not sold any coins since September 1.
Ripple Shifts 33.8 Million to Huobi in Past 2 Weeks, After Allocating 100 Million XRP for It
Ripple fintech firm has sent almost 40 million XRP to Huobi since October began from the 100 million allocated for it in the first place
Data provided by the analytics platform Bithomp that works with XRP transactions, over the past eighteen days, Ripple distributed ledger tech provider has shifted 33,805,080 XRP to the major digital exchange Huobi.
One third of Ripple’s 100 million XRP shifted to Huobi
This amount of crypto equals to $38,790,225. The size of weekly transactions has been changing since September 29, when Ripple allocated a whopping 100 million XRP lump to be sent to Huobi in regular transfers – it started as 1,542,780 XRP, continued as 2,309,580. So far, Ripple is moving 1,911,150 XRP lumps to Huobi.
The exchange has recently announced its withdrawal from mainland China and by December 31 it plans to stop crypto trading against CNY.
XRP becomes number one choice for UK retail investors
At the time of writing, the sixth largest cryptocurrency, XRP, is changing hands at $1.15, showing a mild rise of 2.54 percent, as per the data provided by CoinMarketCap.
As reported by U.Today earlier, a recent report by a leading trading platform eToro stated that the majority of retail crypto investors in the UK now prefer XRP as their top asset. Cardano’s ADA is the second favorite.
Ripple Labs has recently joined the Digital Pound Foundation to help UK authorities work the CBDC they are developing – digital pound sterling.