Jul 17, 2023·edited Jul 23, 2023Liked by Sam Andrew
The quote from the court opinion is not part of the decision from the case. It is read in as the standard by which to do any Howey analysis. The dependency on this to formulate a legal opinion is incorrect. Additionally, the case finds XRP to be part of an investment contract. Given the fungibility of the token, it is unclear the impact this will have in the market or secondary trading.
Taken as the court's conclusion "Therefore, having considered the economic reality and totality of circumstances surrounding the Institutional Sales, the Court concludes that Ripple’s Institutional Sales of XRP constituted the unregistered offer and sale of investment contracts in violation of Section 5 of the Securities Act."
The only issue that was decided in this case that is relevant to our industry is how to litigate and prove reliance and expectations in the third prong of Howey, with sufficient facts.
I write this because I have growing concerns that the misinterpretation of this case is going to be very costly to founders and our industry as whole.
The quote from the court opinion is not part of the decision from the case. It is read in as the standard by which to do any Howey analysis. The dependency on this to formulate a legal opinion is incorrect. Additionally, the case finds XRP to be part of an investment contract. Given the fungibility of the token, it is unclear the impact this will have in the market or secondary trading.
Taken as the court's conclusion "Therefore, having considered the economic reality and totality of circumstances surrounding the Institutional Sales, the Court concludes that Ripple’s Institutional Sales of XRP constituted the unregistered offer and sale of investment contracts in violation of Section 5 of the Securities Act."
The only issue that was decided in this case that is relevant to our industry is how to litigate and prove reliance and expectations in the third prong of Howey, with sufficient facts.
I write this because I have growing concerns that the misinterpretation of this case is going to be very costly to founders and our industry as whole.