As the XRP community celebrated 3 years since the court ruled the token is not a security, Marc Fagel, a veteran securities litigator, has argued that Ripple Labs may not be out of the woods yet.
In a heated debate with David Schwartz, the former Chief Technology Officer at Ripple, Fagel argued that the case comes down to whether the company sold XRP as a security. Furthermore, he noted that the case theories evolved over time under the former chairman of the Securities and Exchange Commission (SEC), Gary Gensler.
“And I’m not defending what I think was a lack of nuance in how the SEC framed its legal theories; it certainly felt like their points evolved over time (not surprising given the novelty of the issues). But ultimately the Ripple case came down to whether it sold XRP as securities,” Fagel noted.
The former SEC head of enforcement started the debate with Schwartz after an XRP community member, alias @XRPMythBurster, signaled frustration over the case’s impact on the XRP price. As such, Fagel questioned whether Ripple lied to the court in its argument that secondary XRP holders did not care about its token distribution method.
“The case was not against XRP, just Ripple. And since Ripple’s defense was that XRP holders did not care (or even know) about Ripple, it’s odd that you were mad. Are you suggesting Ripple lied to the court?” Fagel noted.
Schwartz defends Ripple’s XRP sales
In his defense, Schwartz noted that Fagel’s argument ‘is a bizarre attempt to rewrite history. Moreover, he highlighted that a concession that XRP is not “per se” a security, as mere code, does not amount to admitting that its security status depends solely on Ripple’s direct sales methods.
Schwartz argued that the court ruled that XRP is not a security in its entirety, despite the otherwise partial ruling. He noted that there was only one Howey analysis, which the SEC applied to all XRP sales by Ripple, including blind offers on exchanges.
With the SEC having rejected the argument that each XRP sale had to be analyzed under the Howey test, Schwartz concluded that Fagel’s thesis was an attempt to manipulate history.
