Ripple CTO Emeritus David Schwartz says the SEC effectively treated XRP as a security despite acknowledging the crypto token was not inherently one, challenging a former SEC attorney’s interpretation of the Ripple case.
Key Takeaways
David Schwartz says the SEC treated XRP as a security by arguing holders expected profits from Ripple’s efforts.Former SEC regional director Marc Fagel says the case targeted Ripple’s XRP sales, not the crypto token itself.Their dispute centers on whether calling XRP “just code” meaningfully limited the SEC’s legal theory.He also stated the SEC’s filings, public statements and the court’s ruling contradicted Fagel’s interpretation and showed that the agency’s argument extended beyond Ripple’s sales conduct.
Former SEC Official Defends Agency’s InterpretationMarc Fagel, a retired attorney, spent more than 15 years at the SEC and served as Regional Director of its San Francisco office from 2008 to 2013. Across his 28-year legal career, he specialized in securities enforcement and oversaw investigations involving public company disclosures, insider trading and investment advisers.
“The SEC is absolutely *not* conceding here that the only issue is whether Ripple ‘sold it as a security’ as you claim.”
Exchange Sales Complicate Fagel’s InterpretationAccording to Schwartz, this cannot be explained simply by saying Ripple “sold it as a security.” Buyers in blind exchange transactions were not necessarily exposed to Ripple’s representations or aware of the seller’s identity.
He maintained that only such a broad theory could encompass exchange sales.
‘Just Code’ Did Not Settle the SEC’s Broader XRP TheoryThat disagreement remains central to the case’s legacy. Future courts applying the reasoning in the Ripple ruling will help determine whether the decision is understood primarily as a transaction-specific analysis or as a broader rejection of the SEC’s attempt to link exchange buyers to Ripple’s continuing efforts.
