[September 2022, New York] Both, SEC and Ripple filed motions for summary judgment – meaning each side declares that they have arguments that can win the case without a trial. XRP price reacted positively but are there any grounds?

The SEC’s argument is based on the Howey test, a precedent from US Supreme Court case of 1946, where four criteria were defined. An “investment contract” is deemed to exist if there is 1) an investment of money 2) in a common enterprise, 3) with the expectation of profit 4) to be derived from the efforts of others. Based on this test in 2017 the SEC investigated DAO and ruled that most of ICOs were investment contracts. At that time, it was a guidance for the community. Now, by suing Ripple, a registered American company and the largest crypto project, SEC has set a completely different tone.

Ripple’s counterargument and their defense strategy is rather spread. In 2021 they pointed out to the SEC that they should be treated the same as Ethereum. In the summary judgement, they are appealing to the definition of the “investment contract” in a case prior to Howey, they claim that some of the investments did not involve money under the definition of Howey test, and are appealing to exclude the sales of XRP in foreign platforms, outside the US SEC jurisdiction.

Nevertheless, XRP reacted with almost 40% price hike. Maybe the investors saw a possibility of an early resolution that would end a two year wait-it-out stance. In some way, SEC has already damaged XRP holders since the Ripple token missed the crypto assets spike of 2021. On the other hand, such a spike could have attracted more investors that by now would hold the troubled asset.

Now, Analisa Torres, the judge of Southern District of New York shall make a ruling based on the facts in the presented summaries or decline the summary judgement and pass it on to a jury. The decision on this is due by the end of the year and, if it remains under judicial ruling, to be resolved in March 2023. We’ve marked our observation calendar.

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