Ripple Decentralized and XRP Not a Security, Says Crypto Lawyer

A pro-Ripple crypto lawyer has predicted that the fintech firm will win its case against the Securities and Exchange Commission.

On April 11, pro-Ripple attorney Jeremy Hogan posted a detailed thread on why he thinks the firm will win its case.

The SEC sued the company back in December 2020, accusing it and its executives of selling unregistered securities.

The case has dragged on for more than two years. However, its outcome could be a watershed moment for the entire crypto industry in the United States.

“This is a nuanced legal battle on which the future of ‘crypto’ as we know it may hinge,” Hogan said.

XRP is Decentralized (Or Is It?)

Ripple argued that there must be a “contract” for something to be considered a security. This has been stipulated by the Howey Test on which the SEC argument hinges.

However, Hogan noted that the agency cited several cases where there was no written formal agreement. Furthermore, it has had successes in cases where there hasn’t been an “investment contract.”

This is not good news for Ripple.

Hogan believes there is enough in the Ripple briefs for the trial judge to rule in its favor. It rests on one thing, he added – decentralization.

Traditional purchases need a contract because centralized entities make them. This is why they lost their cases to the SEC, argued Hogan. “Historically, sales of securities are from centralized sellers,” he said before adding:

“The difference in crypto is that it DOES make sense to purchase crypto, because it is decentralized. No one owns the ‘network.’  And so it makes sense that someone might purchase XRP as an investment without having a contract with anyone. This is the key differentiator.”

If the judge understands the technology, “Ripple will win on this issue,” he said.

Ripple Use Cases a Better Argument

However, a counterargument could be that XRP is centralized because it is controlled by Ripple. The fintech firm has kept around half of the total supply of XRP tokens in escrow and releases them according to its own schedule.

This differs from the supplies of Bitcoin, which is governed by the proof-of-work mechanism, or Ethereum, which is issued by proof-of-stake consensus.

With this in mind, Ripple’s use cases may be a better argument as to why it will win. XRP Ledger is used by banks and financial institutions across the world. Therefore, XRP is essentially a cross-border payment system, not a security.

XRP has gained 4% on the day to reach $0.525 at the time of writing.