Renowned legal expert Fred Rispoli has brought attention to a significant issue concerning the legal status of XRP, suggesting that the cryptocurrency could be classified as a security in California but not in New York.
Rispoli, an attorney, shared this viewpoint in response to the recent ruling in the civil securities lawsuit against Ripple filed by Zakinov. The lawsuit claimed that Ripple CEO Brad Garlinghouse violated securities laws by offering XRP in 2017. Yesterday, a summary judgment decision was reached in the case.
In the latest ruling, Judge Phyllis Hamilton dismissed four of the charges against Ripple, including the company’s failure to register with the SEC. However, she determined that the question of whether Ripple offered and sold XRP as a security would be decided by a jury.
Notably, Ripple’s legal counsel requested that Judge Hamilton follow the reasoning of Judge Analisa Torres in the SEC lawsuit, which concluded that the company’s programmatic sales of XRP on digital exchanges did not constitute securities. Judge Torres held that individuals who bought XRP programmatically had no expectation of earning profits directly from Ripple’s efforts. This aligns with one of the criteria of the Howey test, which determines whether a transaction qualifies as a security.
Judge Hamilton, however, did not adopt this reasoning and emphasized that the case was a matter of law for the jury to decide. This is not the first time that a U.S. District Judge has disagreed with Judge Torres’ reasoning. Last year, the judge presiding over the SEC v. Terra lawsuit rejected the logic behind Judge Torres’ verdict.
Notably, Attorney Rispoli has urged cryptocurrency enthusiasts to advocate for federal legislation in light of the recent disagreement with Judge Torres’ reasoning. He emphasized that while XRP is considered a non-security in New York, it could be classified as a security in California. Therefore, federal legislation is necessary to establish clarity and consistency across different jurisdictions regarding the regulatory status of cryptocurrencies, including XRP.
In the meantime, Ripple’s Chief Legal Officer Stuart Alderoty believes that Judge Torres’ reasoning remains valid despite the recent ruling in the Zakinov case.
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