Morgan asserts that XRP sales fail to meet at least two of Howey test prongs, making the SEC’s case weak. With the facts apparently not aligning with the Howey framework, he sees little room for the SEC to overturn the earlier judgment.
In the ongoing Ripple versus SEC case over XRP, legal experts are assessing the chances of a successful SEC appeal after Judge Analisa Torres granted Ripple a partial win in July. The judge ruled that XRP sales on public exchanges were not unregistered securities deals.
Jeremy Hogan, a lawyer and partner at Hogan & Hogan, weighed in on the SEC’s odds if they appeal. Referencing statistics, Hogan stated the SEC has just a 14.2% chance of winning on appeal. He believes the very fact-based manner of Judge Torres’ opinion does not improve the SEC’s chances.
Fellow lawyer Bill Morgan provided an even bleaker assessment of the SEC’s prospects. He generously gives them only a 3% chance of success if they appeal, since, in his view, the XRP sales do not even meet the requirements of the Howey test for determining whether an asset is an investment contract security.
I don’t see any obvious appellable error other than in Ripple’s favor in respect of ODL sales which don’t meet at least two prongs of the Howey test. The SEC’s prospects of success on appeal are very slim and I feel generous today so I am giving it 3% chance of success on appeal https://t.co/FRIFbqzmVA
— bill morgan (@Belisarius2020) October 22, 2023
Ripple’s XRP Does Not Meet the Howey Test Requirement
The Howey test, established by the Supreme Court in 1946, says that for an asset to be considered a security, it must involve the investment of money in a common enterprise with an expectation of profits derived primarily from others’ efforts. Morgan asserts that XRP sales fail to meet at least two of these Howey test prongs, making the SEC’s case weak. With the facts apparently not aligning with the Howey framework, he sees little room for the SEC to overturn the earlier judgment.
Both lawyers’ assessments don’t look good for the SEC if they keep on fighting against Ripple and XRP in court. Based on similar cases, it seems unlikely they’ll win on appeal. What’s more, Judge Torres has pointed out facts that don’t support calling XRP an unregistered security according to the Howey test. This suggests that the law isn’t in favor of the SEC.
While the SEC could still try to appeal, the experts think it’s very likely that the appeal will be turned down if it’s based on arguing that XRP is a security. So, most people watching this case closely believe the SEC is facing a tough challenge in trying to change the court’s decision unless new evidence shows up. The law and the situation seem to be against them.
XRP Bulls Look On
After Judge Torres’ July ruling, many XRP enthusiasts believed the years-long case was nearing the end, pushing the XRP price up over 100% in just hours. Though these gains have retraced, a final judgment against the SEC could again rocket XRP to new highs.
The favorable judgment would likely restore or even exceed the buying frenzy previously seen, as XRP bulls are also looking for the best opportunity to push the market higher again.
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