Lawyers argue whether exchanges are allowed to relist XRP after Friday’s Ripple vs. SEC hearing

  • The Twitter campaign #relistXRP under which the XRP community is calling on crypto exchanges worldwide to relist XRP has managed to be “trending” in the US.
  • Attorneys Jeremy Hogan and Jesse Hynes differ on whether Friday’s SEC statement implies that exchanges can relist XRP without risking a lawsuit themselves.

The hashtag #relistXRP continues to make waves. After a discovery hearing in the U.S. Securities and Exchange Commission’s (SEC) case against Ripple produced two “surprise sensations” in Ripple’s favor last Friday, the XRP community is getting its hopes up that the token could once again be listed on exchanges worldwide (for American customers).

An SEC attorney had stated at the hearing that “only Ripple and affiliates of Ripple” could have illegally sold XRP. Attorney Jeremy Hogan analyzed that exchanges that delisted XRP two months ago did not violate securities laws and would not do so if they offered XRP for sale again. The attorney also speculated that the SEC may have received a number of requests for clarification from the exchanges.

Since the hearing, the SEC has yet to comment on the matter, but on Twitter #relistXRP is making big waves. After the hashtag was already “trending” in Australia on Saturday, the XRP community managed to do the same in the US yesterday.

Ripple doesn’t control Coinbase = exchanges can relist XRP?

However, the interpretation of the phrase “only Ripple and affiliates of Ripple” seems more contentious than thought. Via Twitter a few hours ago, however, Jeremy Hogan reiterated his position, explaining that the term “affiliate” is defined in Rule 405 of the Securities Act of 1933. Accordingly, it is a “person (or entity) that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with”.

Hogan concluded, “Tell me Coinbase, does Ripple control you?” However, another popular attorney in the XRP community, Jesse Hynes, interjected that it could be argued “that an exchange is a dealer, and thus not exempt from Section 5”. Hogan had an answer to this as well, saying:

Even IF they are considered a broker-dealer, the SEC already put on the record in response to Deaton’s motion that there has been no legal determination of XRP’s “status.” So, the exchanges behinds are covered either way now. PS. Hi Jesse! Have a great week!

However, Hynes replied that he is “not so sure” he agrees. “If it’s ruled to be an unregistered security, then that would date back. It’s fair to say this lawsuit has given exchanges fair notice that they may be selling an unregistered security. I don’t think anything in their response shields them.” Hogan, countered that:

It’s not a notice issue, it’s a binary “it is” or “isn’t” analysis. But this lawsuit won’t provide a “ruling” that XRP is or isn’t anything – that’s a red herring and the exchange’s lawyers did what most advisory lawyers do and chickened out. It’s time for them to re-analyze.

Hynes was not convinced of this either, stating, “and if it is, exchanges have been selling unregistered securities. And then we get back to are they a broker, and if so they are in trouble”.

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