SNEAK PEEK
- Slack v. Pirani ruling may affect XRP’s “security” status.
- The case highlights the complexity of classifying digital assets.
- Ripple could leverage this precedent in their legal strategy.
A recent U.S. Supreme Court case, Slack v. Pirani, has stirred quite a debate among the cryptocurrency community, particularly among those following Ripple’s lawsuit. Several comparisons have been drawn between the ruling in this case and the ongoing litigation involving Ripple’s digital currency, XRP.
Furthermore, the Slack v. Pirani ruling might have important implications for XRP when translated into digital assets. At the center of Ripple’s ongoing lawsuit is whether XRP can be classified as a “security,” and if so, under what circumstances.
This U.S. Supreme Court case just came out last week. Slack v. Pirani
The case is analogous to XRP in the secondary market if/where the XRP was sold as an “investment contract.”
XRP doesn’t magically maintain status as a “security” outside the context of the initial “contract.” pic.twitter.com/XfHiFoATDs
— Jeremy Hogan (@attorneyjeremy1) June 5, 2023
Attorney Hogan Predicts XRP’s Departure from ‘Security’ Status
Attorney Jeremy Hogan opined that the ruling might suggest a similar outcome for digital asset sales. He proposed that the XRP might not necessarily maintain its status as a “security” beyond the context of the initial “investment contract.” This would particularly apply to secondary sales, where XRP is sold not as part of an investment contract but as a standalone digital asset.
However, the interpretation isn’t that black-and-white. As noted by Marc Fagel, the Supreme Court did not assert that the asset ceases to be a security. Instead, the ruling limits liability under the 1933 Securities Act while accepting that liability under the 1934 Act may still exist. Notably, it is essential to note that the case was about stock, not investment contracts, which adds another layer of complexity to the interpretation.
Possible Ripple Brief on Damages
Hogan suggests we might see a reference to the Slack v. Pirani case in a Ripple brief on damages, should one be necessary. This likely stems from Ripple leveraging the precedent that an asset does not inherently maintain its security status in secondary sales.
In summary, while the Slack v. Pirani case offers an intriguing parallel to the situation with XRP, it is not a direct analog, and its implications should be considered cautiously. The differing nature of the assets in question—stock vs. digital asset—and the nuances in legalities under the 1933 and 1934 Acts mean that the direct application of this ruling to Ripple’s lawsuit is not straightforward.
