From the start, Ripple’s legal team has leaned on the Revak v. SEC Realty case to support its stance against the Securities and Exchange Commission (SEC), revealing the SEC’s attempt to undermine cryptocurrency.
In a recent discussion, Paul Grewal, Coinbase’s Chief Legal Officer, and John Deaton, a prominent lawyer for XRP holders, chimed in on the critical aspects of Ripple’s case, focusing on the 1994 Revak case.
Expert Insight: Dismantling the SEC’s Ecosystem Argument
Grewal yet again brought up the Revak case and said that it showed how silly it is to look at an investment deal through the lens of “ecosystem” access.
He reaffirmed the court’s Howey test stance, saying that a simple link between investor wealth and promoter activities doesn’t easily meet the requirements. The court must assert that a common enterprise must be essentially dependent on promoter expertise for investments to depend on luck.
The SEC’s framework for digital asset analysis, found on its website, mentions that federal courts demand “horizontal commonality” or “vertical commonality” to fulfill the “common enterprise” aspect of the Howey test.
However, the Commission itself doesn’t explicitly require these commonalities and doesn’t treat “common enterprise” as a separate element of an “investment contract.”
John Deaton agreed with Grewal and said that the Revak case was similar to the ongoing legal fights between LBRY, Ripple, and Coinbase. He focused on the details of jurisdiction, pointing out how the Revak case, which was heard by the Second Circuit, was related to the Ripple and Coinbase cases.
Latest Updates in SEC vs. Ripple, Coinbase Lawsuit
Looking at the current scenario, the SEC’s legal battles with Ripple Labs and Coinbase carry significant implications for the digital asset right now.
A recent ruling allowed the SEC to proceed with its lawsuit against Coinbase but narrowed its scope, seen as a partial victory for Coinbase. The SEC is contesting Ripple’s dismissal, arguing that Ripple failed to show harm in producing recent financial statements.
The outcome could impact the XRP ecosystem, potentially opening doors for spot XRP ETFs with a positive resolution for Ripple. Meanwhile, Ripple’s strategic hiring in institutional DeFi signals a move to expand its influence in the cryptocurrency ETF space.