Ripple clarified six misconceptions about the recent ruling. After it, XRP and Bitcoin are the only digital assets that aren’t considered securities in the US.
On July 13, Judge Torres ruled in the trial of Ripple v. SEC, stating that Ripple is not a security.
The first point that the company addressed in its Q2 report is that the decision issued by Judge Torres wasn’t split.
The company said that it’s clear that the main point of the court decision was to understand if Ripple was or was not a security, and it has been clear that it’s not.
The second misconception related to XRP being security in some settings but not others.
The company said that XRP is not a security, explaining, as the court said, that “XRP, as a digital token, is not in and of itself… an investment contract.”
The third misconception was related to a share of stock always being taken as a security. Hence, it makes no sense that certain transactions in XRP are securities and others are not.
On this point, Rippled said that an investment contract is a particular type of security and must be analyzed on a transaction-by-transaction basis.
The fourth misconception concerns the ruling protecting only sophisticated institutions, not retail buyers.
“The court ruled on the reach of the SEC’s jurisdiction, which stops once there are no securities to regulate. Where there is no investment contract, there is no security; and where there is no security, there is no role for a securities commission. Like a hammer, the SEC wants everything to be a nail (or in this case, a security), but the law does not go as far as the SEC would like it to go.”
The fifth misconception is related to the decision that makes it impossible for Ripple to do business. Ripple explained that since the lawsuit by the SEC in December 2020, the company has been doing business mostly with companies outside the US.
The last misconception concerns the court ruling against Ripple on its fair notice defense.
On this point, Ripple added:
“The SEC moved for summary judgment on Ripple’s fair notice defense, which was based, among other things, on internal emails from the SEC indicating that its then-head of Corporate Finance ignored multiple warnings that his speech contained analysis divorced from the Howey factors and would create “greater confusion.”