Ripple Update: Renowned Cryptocurrency Lawyers Provide Clear Explanation on Legal Status of XRP

Prominent crypto lawyers John Deaton and Mike Selig have taken to Twitter to provide clarity on the Torres Decision, which has often been misinterpreted in relation to XRP and security laws. Deaton expressed concern about the misinterpretation, questioning whether it was due to confusion or intentional misstatement to promote false narratives. He specifically called out politicians like Brad Sherman for ignoring the law to push for government control over financial markets.

Selig, a seasoned crypto and financial regulation lawyer, continued the thread by explaining Judge Torres’ ruling. He stated that XRP itself is not a security but can be sold as part of a security. He compared XRP to commodities like gold or whiskey, which can also be part of investment schemes that fall under securities laws. According to Selig, for securities laws to be applicable, there must be evidence of a contract, transaction, or scheme where someone invests money expecting profits derived from others’ efforts. Judge Torres found no such evidence regarding specific sales of XRP.

Selig also challenged the notion that a commodity can represent a security, stating that there is no legal precedent supporting this view. He pointed out that other courts have similarly concluded that crypto assets cannot be considered investment contracts. This challenges the idea of crypto assets inherently being investment contracts.

In discussing the Torres Decision, Selig highlighted a regulatory gap in crypto-asset transactions. While most transactions involving these assets are unlikely to breach securities laws, legislative action is needed to address this situation. Selig mentioned that the SEC seems to prefer the narrative that crypto assets become securities when sold to certain investors, which conveniently covers the existing regulatory void. However, he emphasized that without proper legislation, the SEC lacks jurisdiction in these matters.

The Twitter thread by Deaton and Selig aims to provide accurate information and dispel misconceptions surrounding the Torres Decision. It is a response to the spread of inaccurate information by various individuals, including financial commentators. By shedding light on the legal aspects of XRP and securities laws, the two lawyers hope to bring clarity to the often-misinterpreted topic.