In a series of pointed criticisms leveled against the US Securities and Exchange Commission (SEC), pro-XRP lawyer Bill Morgan has highlighted what he views as repeated judicial victory against the SEC’s approach to crypto regulation by enforcement. His remarks draw on several recent cases where federal judges have questioned the SEC’s stance that digital tokens akin to XRP constitute securities.

Why The SEC Lost: Pro-XRP Lawyer

Bill Morgan’s evaluation cites three distinct federal court rulings which collectively undermine the SEC’s long-standing assertion that cryptocurrencies needs to be treated similarly to traditional securities under the law. Morgan shared his comments via X, emphasizing the importance of those judicial opinions in shaping the longer term regulatory landscape of cryptocurrencies.

Within the SEC vs. Ripple case, Judge Analisa Torres notably differentiated the digital currency XRP from traditional securities. Morgan remarked, “Judge Torres in SEC v Ripple told the SEC that the XRP token itself just isn’t a security.” He also cited judge Torres who made clear: “XRP, as a digital token, just isn’t in and of itself a ‘contract, transaction[,] or scheme’ that embodies the Howey requirements of an investment contract.

Further judicial skepticism arose within the SEC vs. Payward Inc. (Kraken case), where Judge William Orrick cautioned the SEC against conflating crypto tokens with investment contracts. Orrick’s statement was particularly striking: “Orange groves aren’t any more securities than cryptocurrency tokens are,” he said.

Judge Orrick also warned the SEC to take care of a transparent distinction between the crypto asset itself and the sales of the asset. “The SEC needs to be careful going forward to take care of this distinction. To the extent it tries to argue that the person tokens that form the idea of transactions on Kraken are investment contracts, or are themselves securities, its argument cannot proceed.”

Morgan also referenced the SEC vs. Binance case, where Judge Ketanji Brown Jackson dismissed the SEC’s theory that a crypto token is the embodiment of an investment contract, clarifying that it could, under certain circumstances, be merely the topic of an investment contract.

“In SEC vs Binance Judge Jackson completely rejected the SEC’s embodiment theory that the crypto token is the embodiment of an investment contract somewhat than possibly in certain circumstances being the topic of an investment contract,” Morgan noted.

His critique culminates in a rhetorical query that challenges the SEC’s current regulatory framework: “What number of more judicial comments are needed of this type before the SEC jettisons the discredited embodiment theory or any forlorn hope the courts will ever regard the crypto asset itself as a security?”

Remarkably, it doesn’t appear to be enough thus far. In a highly controversial motion, the SEC sent a Wells notice to the NFT marketplace OpenSea on Wednesday, alleging that the NFTs traded on the platform might be classified as unregistered securities.

At press time, XRP traded at $0.5605.

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