The protracted legal dispute between Ripple, the blockchain technology company, and the Securities Exchange Commission (SEC) continues to evolve, with both parties identifying potential weaknesses in their adversary’s case.
Stuart Alderoty, Ripple‘s Chief Legal Officer, took a shot at the SEC’s argument regarding the “common enterprise” notion in a tweet on May 13. Alderoty referenced the SEC’s failed attempt to argue this point in the 1946 Supreme Court Howey case.
In that landmark case, the SEC maintained that an investment in a “common enterprise” was not required if there existed a “community of interest.” The Supreme Court, however, rejected this assertion. Alderoty emphasized that the SEC was mistaken in its interpretation both in 1946 and currently in their stance on XRP.
A battle over legal definitions
Alderoty argued that the concepts of common interest and common enterprise are distinct and that the SEC’s assertion that all XRP holders participate in a common enterprise is erroneous. He has accused the SEC of misapplying the Howey test, with the dispute primarily centering on the “common enterprise” component of the test. Ripple’s legal team asserts that the SEC is overreaching the term’s original meaning.
As this legal confrontation enters its third year, the SEC posits that the fungibility of XRP demonstrates the existence of a common enterprise. The SEC argues that all XRP units are interchangeable, their value fluctuating in tandem, which it claims constitutes a common enterprise.
In response to Alderoty’s tweet, crypto-law expert Bill Morgan suggested that the SEC is relying on an argument that the Supreme Court has previously dismissed.
Ripple waits for summary judgment
The precedent set by the Howey case continues to be a bone of contention for both sides as the crypto community eagerly awaits the summary judgment date in the ongoing legal feud.
To recap, the SEC has alleged that Ripple distributed unregistered securities in the form of XRP tokens. There are widespread speculations that a resolution may be reached in the first half of this year. Various possible outcomes have been proposed, although Ripple has managed to secure a handful of minor victories during the process.
Meanwhile, Brad Garlinghouse, Ripple’s CEO, spoke at the XRP Las Vegas 2023 event, expressing his appreciation to the XRP community for their steadfast support throughout the legal tussle.
Currently, the focal point of the dispute, XRP, is being traded at $0.43, marking a less than 0.5% decrease over the past 24 hours.
