Prominent legal expert Fred Rispoli has raised concerns about the legal status of XRP, suggesting that the coin could be classified as a security in California but not in New York. This opinion comes in response to the recent ruling in the Zakinov civil securities lawsuit against Ripple, where allegations were made against Ripple CEO Brad Garlinghouse for violating securities laws through an XRP offering in 2017. The case received a summary judgment decision, with Judge Phyllis Hamilton dismissing four charges against Ripple but sending one to a jury.
Judge Hamilton’s ruling implies that a jury will decide whether Ripple offered and sold XRP as a security. Ripple’s counsel urged Judge Hamilton to follow the reasoning of Judge Analisa Torres in the SEC lawsuit, who concluded that Ripple’s programmatic sales of XRP on digital exchanges do not constitute securities. This reasoning was based on the fact that programmatic buyers of XRP had no expectations of making profits directly from Ripple’s efforts, a key aspect of the Howey test used to determine whether a transaction is a security.
However, Judge Hamilton did not adopt this reasoning and emphasized that the case is a matter of law that a jury will decide. This dissent from Judge Torres’ logic is not unique, as last year, a U.S. District Judge in the SEC v. Terra lawsuit also rejected Judge Torres’ verdict. Attorney Rispoli has called for federal legislation to provide clarity and uniformity across different jurisdictions regarding the regulatory status of crypto assets like XRP. He highlighted the contrast between New York and California’s views on XRP’s legal status, underscoring the need for federal intervention.
Despite the recent ruling in the Zakinov case, Ripple’s Chief Legal Officer Stuart Alderoty maintains that Judge Torres’ reasoning remains valid. Alderoty’s position suggests that there may be ongoing disagreements and legal battles over the classification of XRP as a security in different jurisdictions. Rispoli’s call for federal legislation is driven by the need for consistency and clarity in the legal status of cryptocurrencies like XRP. With the potential for conflicting rulings across states like New York and California, a federal framework could help provide guidance and ensure fair treatment for crypto assets.
In conclusion, the cryptocurrency world faces uncertainty due to differing interpretations of XRP’s legal status in various jurisdictions. Rispoli and other legal experts emphasize the importance of federal legislation to establish uniformity and clarity in the regulation of cryptocurrencies. The recent ruling in the Zakinov case highlights the complexities of determining whether XRP constitutes a security, with Judge Hamilton’s decision diverging from Judge Torres’ previous reasoning. The ongoing legal battles and disagreements underscore the need for a comprehensive approach to cryptocurrency regulation that can address the complexities of digital assets like XRP. Federal intervention could provide much-needed guidance and prevent conflicting rulings that could impact the future of cryptocurrencies. Ultimately, the call for federal legislation reflects the growing need for regulatory certainty in the ever-evolving world of cryptocurrencies.