Sunday, July 21, 2024

A legal expert has expressed doubts about the recent district court ruling on XRP, stating that it is based on unstable grounds. The expert warns that Ripple’s apparent triumph might be short-lived, arguing that the judge misinterpreted the law.

Attorney Bryan Jacoutot provided his analysis of the SEC v. Ripple case on Twitter, shedding light on his concerns. Jacoutot, who works at Election Law Group and Taylor English Duma, specializes in general litigation and election law, while also focusing on developing Taylor English Duma’s Bitcoin practice group. He began his assessment by stating:

“After reviewing the district court ruling on XRP, I find it to be built on an unstable foundation. We should anticipate an appeal.”

Jacoutot pointed out that the court did determine that Ripple’s sale of XRP to institutional investors violated securities regulations. Considering that Ripple earned nearly a billion dollars from these XRP sales, the lawyer predicted that the crypto company “will likely have to refund/disgorge” the funds, in addition to paying penalties and fines.

Moreover, he highlighted, “The court also concluded that, in the context of the ‘programmatic sale’ of XRP to random individuals, XRP did not qualify as an investment contract under Howey, and therefore was not classified as a security.”

Jacoutot argued that the court’s rationale was flawed, stating:

“In my opinion, the court made a mistake by focusing on whether buyers knew if the XRP originated from Ripple. According to Howey, this is irrelevant. What matters is whether buyers anticipated profits based on Ripple’s efforts, which one can clearly argue they did (how else does XRP increase in value?).”

Regarding the implications of the XRP ruling for Ethereum, the attorney cautioned that even if the SEC v. Ripple case decision is upheld, it does not necessarily guarantee a favorable outcome for the Ethereum Foundation. He pointed out the key distinctions in the methods employed by Ripple in selling the “pre-mine,” stating, “The pre-sale of ETH had many similarities.”

Jacoutot clarified that, first and foremost, “Everyone knew they were purchasing from the Ethereum Foundation (which the Ripple Court deemed significant).” Secondly, “The ETH acquired during the pre-sale was subject to a lockup period, which played a critical role in the court’s determination that institutional investors bought XRP as a security.”

In conclusion, while acknowledging the significance of the victory for Ripple and its supporters, the lawyer issued a warning:

“This victory may be short-lived. In my view, the judge misinterpreted the law.”

“Even if she did not, numerous projects (including Ethereum) remain vulnerable. Furthermore, the court left several complex securities questions unanswered,” he concluded.

We invite you to share your thoughts on attorney Bryan Jacoutot’s analysis in the comments section below.

Frequently Asked Questions (FAQs) about legal analysis

What is the analysis provided by lawyer Bryan Jacoutot regarding the ruling on Ripple and XRP?

Bryan Jacoutot, an attorney specializing in general litigation and election law, analyzed the district court ruling on XRP. He expressed concerns about the ruling, stating that it rests on unstable grounds and that the judge misinterpreted the law.

What did the court rule regarding Ripple’s sale of XRP to institutional investors?

The court ruled that Ripple’s sale of XRP to institutional investors was an unlawful security sale, which may require Ripple to return/disgorge the funds received from these sales and pay penalties and fines.

Did the court classify XRP as a security in the context of the ‘programmatic sale’ to random people?

No, the court found that XRP did not constitute an investment contract under Howey and, therefore, was not classified as a security in the context of the ‘programmatic sale’ to random individuals.

What was lawyer Bryan Jacoutot’s criticism of the court’s reasoning?

Jacoutot disagreed with the court’s reasoning, particularly its emphasis on whether buyers knew if the XRP originated from Ripple. According to him, the focus should have been on whether buyers expected profits based on Ripple’s efforts, which he believes is evident in the case of XRP.

What are the implications of the ruling for Ethereum?

Bryan Jacoutot cautioned that even if the ruling is upheld, it does not guarantee a favorable outcome for the Ethereum Foundation. He highlighted the distinctions in the methods used by Ripple and Ethereum in their sales, suggesting that Ethereum and other projects could still face potential challenges related to securities regulations.

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4 comments

CryptoNoob12 July 15, 2023 - 8:38 pm

So, Ripple sold XRP unlawfully? That’s not good. But hold on, if it wasn’t a security in the programmatic sale, then why should they pay penalties? This lawyer’s tweetstorm got me confused. Can someone explain?

Reply
BlockchainTrader July 16, 2023 - 12:56 am

Bryan Jacoutot’s analysis is a wake-up call. Ripple’s victory might be short-lived. And what about Ethereum? Could it face similar issues? The SEC v. Ripple case is shaking up the crypto market. Brace yourselves!

Reply
CryptoEnthusiast87 July 16, 2023 - 1:25 am

wow this lawyer guy thinks he knows better than the judge?! smh. just wait for the appeal, dude. ripple’s victory might not last long, he says. #notsofast

Reply
LawStudent23 July 16, 2023 - 10:02 am

Bryan Jacoutot’s analysis seems pretty solid. I mean, the judge got the law wrong? That’s a big claim! I wonder how this will impact other projects, like Ethereum. The whole crypto world is so unpredictable!

Reply

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