SDNY magistrate starts to wrestle with SEC’s characterization of Ripple’s XRP



Amid the drama of financial investigative reporting, the term “bombshell” may be currently a bit overused. But writer Jamie Crawley at Coindesk may not be far off the mark in using this term to refer to recent comments by Southern District of New York magistrate Sarah Netburn on the nature of Ripple’s XRP token.


In questioning the line of prosecution by the U.S. Securities and Exchange Commission, Netburn recently reportedly suggested that XRP “has utility,” in which case, she said, that distinguishes it as a currency or asset, and not a security.


However, it doesn’t take much analysis of the ongoing court drama to get into the weeds.


As the judge suggests that XRP’s build makes it different from Bitcoin and Ethereum, she’s not suggesting, according to Ripple advocates, that XRP traders should enjoy less expansive permissions than people who buy and sell those other two coins. Meanwhile, reporting by Alisha Roy at Ambcrypto shows SEC lawyer Jorge Tenreiro contending that if XRP does have utility, “the effort to develop a use for XRP is what makes XRP a security,” directly contradicting a lot of the parsing of the judge’s comments going on beyond the courtroom doors.


In the same coverage, Jorge Tenreiro said XRP “cannot be compared to Bitcoin and Ethereum,” while Ripple spokespersons argued that “the economic substance” of XRP is no different from Bitcoin and Ethereum. So while the judge touts the unique utility of Ripple’s XRP as crucial to Ripple’s case, the SEC agrees that Ripple is different, but argues that it hurts Ripple’s case, while Ripple argues that XRP should be viewed more like BTC and ETH, and that this, implicitly, supports Ripple’s case.


Meanwhile the SEC continues to try to poke into the personal finances of ripple CEO Brad Garlinghouse: outsiders often view the SEC’s crusade as aggressive and misguided. Jeremy Hogan, quoted in Crawley’s piece, has this to say:


“No matter what the SEC may try and argue, a currency and a security are, by definition, in opposite … These are two different things. … (Ripple having utility) is exactly what Ripple wants the court to be thinking.”


Clear as mud. In a nutshell, though, analysts like Hogan believe that Ripple is being vindicated by this legal circus, and that the SEC will emerge with a black eye.


Stay tuned.