SNEAK PEEK
- Bill Morgan questions the SEC’s classification of all XRP tokens as investment contracts.
- Morgan argues that sales made to On-Demand Liquidity (ODL) customers do not fulfil the characteristics of an investment.
- Morgan asserts that his ownership of XRP is not a security, emphasizing that it results from fortunate circumstances.
In a recent string of tweets, Bill Morgan, a lawyer and avid supporter of digital assets, raised apprehensions regarding the Securities and Exchange Commission’s (SEC) position on Ripple’s XRP sales.
The SEC wants to be able to say that all XRP in the market are or represent Ripple’s investment contracts (meaning all XRP Ripple has offered/sold/distributed). Problem is the uncomfortable truth about what the SEC calls the ‘small subset’ of sales to ODL customers/1
— bill morgan (@Belisarius2020) May 23, 2023
Morgan expressed his belief that the SEC’s efforts to classify all XRP tokens as investment contracts encounter a significant obstacle when considering a “small subset” of sales conducted with On-Demand Liquidity (ODL) customers.
Morgan took the position that the sales made to On-Demand Liquidity (ODL) customers do not appear to fulfil any aspect of the Howey test. According to him, these transactions lack the characteristics of an investment because they are promptly dealt with by ODL customers, eliminating the expectation of profit.
They just don’t seem to fit any part of the Howey test. No investment. Even the SEC alleges they are dealt with by ODL customers immediately. No expectation of profit because they are being used as a bridge, not held. No common enterprise. ODL users are customers of a product/2
— bill morgan (@Belisarius2020) May 23, 2023
Furthermore, he argued that ODL users, who utilize XRP as a bridge currency, do not participate in a joint enterprise. Instead, they are simply customers of a product.
Morgan firmly asserted that the SEC’s attempts to categorize all XRP tokens as investment contracts face a significant hurdle when analyzing the sales made to ODL customers. He emphasized that these transactions need to possess the essential investment elements outlined by the Howey test.
By being promptly executed by ODL customers, the sales do not involve holding XRP tokens to generate profit. Moreover, as ODL users utilize XRP as a bridge currency, their involvement does not establish a joint enterprise but positions them as product customers.
In an additional tweet, Morgan clarifies the XRP tokens he possesses, highlighting that they were part of the initial distribution to early adopters or were gifted to charitable organizations. Notably, he points out that the SEC does not allege these tokens as investment contracts.
Just to be clear the XRP I own were some of those initially given to early adopters or gifted to charities which the SEC isn’t alleging were investment contracts./1 https://t.co/7IXkOOOrYP
— bill morgan (@Belisarius2020) May 23, 2023
Morgan confidently asserts that his ownership of XRP is, in no uncertain terms, a security, emphasizing that his possession of the tokens is solely a result of fortunate circumstances. While acknowledging that his XRP holdings are fungible with other tokens of the same kind, he categorically states that they do not fall under the securities classification.
