Mr. Huber, a prominent XRP influencer, has shared two documents that reveal a notable inconsistency in the SEC’s arguments in its legal case against Ripple.
In a tweet that Mr. Huber posted yesterday, he highlighted that the SEC had stated in its “Framework for Investment Contract Analysis of Digital Assets” that the development status of a token is a crucial factor in determining whether the project meets the third requirement of the Howey Test.
The SEC document states that a digital asset would meet the third prong of the Howey Test “if purchasers of a digital asset expect an AP [active participant] to be performing or overseeing tasks that are necessary for the network or digital asset to achieve or retain its intended purpose or functionality.”
Contrary to its statement in the “Framework for Investment Contract Analysis of Digital Assets,” the Securities and Exchange Commission made a different argument in its case against Ripple.
When Ripple Chairman Chris Larsen asked about the exact date that the XRP Ledger became fully functional, the SEC responded that “whether and when the XRPL became fully functional is irrelevant under Howey.”
It is uncertain whether the information revealed in the discovery process will impact the final outcome of the lawsuit, which is anticipated to be delivered shortly, as predicted by attorney John Deaton, the founder of CryptoLaw.
Related article: If Ripple Wins Against SEC, What Does This Mean for XRP?
XRP Community Members Criticize SEC
The recent revelation has caused a reaction among members of the XRP community, who have expressed their discontent on Twitter towards the Securities and Exchange Commission. One cryptocurrency supporter criticized the SEC for being untruthful to the public and disregarding the law.
Another XRP community member, Ashley Prosper, claimed that JPMorgan influenced the Ripple v SEC lawsuit. Ashley Prosper supported Judge Sarah Netburn’s recent comment that the SEC acted hypocritically and unfaithfully to the law.
It is worth mentioning that the SEC’s initial argument was that the speech made by William Hinman, in which he declared Bitcoin and Ethereum as non-securities, reflected his personal opinion rather than the official position of the agency.
However, when it became apparent that this argument was not gaining traction, the SEC changed its position and claimed that the documents were protected by attorney-client privilege. The SEC argued that Hinman had consulted with SEC lawyers during the drafting of the speech, which means that the documents were confidential and should not be disclosed.