digest
Short Summary
Main recommendation: Attorney Jeremy Hogan argues that the SEC v. Ripple case is unlikely to produce a broad legal clarity ruling that XRP is a security, and that Ripple would be smart to settle rather than go to trial. He also says the SEC's requested relief focuses on stopping Ripple's sales and returning money, not on declaring XRP a security. He presents this as legal analysis, not a guarantee of how the case will end.
Key Points
- The writ of mandamus filed by attorney John Deaton against the SEC asks a superior court to order a lower court to act correctly. Hogan says such writs are rarely granted and rarely filed, and that he expects this one to be dismissed.
- Hogan says the petition's first request, that XRP owned by petitioners is not a security, is hard for the SEC to defeat, but the court is unlikely to rule on the whole case through a writ. He also expects the court to find an adequate remedy at law in a damages lawsuit.
- A damages claim against the SEC for the drop in XRP price cannot be filed yet because of sovereign immunity; under the Federal Tort Claims Act, a claim must be submitted and six months must pass before suit, so Hogan says it could be filed around June.
- A separate suit against Coinbase in San Francisco alleges illegal securities sales, with damages based on commissions Coinbase earned rather than the XRP price drop. Hogan explains that in-house counsel tends to be conservative and that this is why many exchanges are halting XRP trading, not that this particular suit will cause the halt.
- The SEC's rulemaking and enforcement functions are separate. Hogan argues that clarity on whether a coin is a security will come from court rulings through stare decisis, not from a bright-line SEC rule, because former SEC head Clayton said the answer depends on the facts.
- The SEC's prayer for relief in the Ripple case seeks to stop Ripple's XRP sales, disgorgement of sale proceeds to buyers, and penalties. Hogan notes it does not request a declaratory judgment that XRP is a security, so he sees limited direct effect on XRP itself.
Details Worth Noting
- Concrete instructions: No step-by-step instructions for the viewer were given. The only actionable advice was to read a lawsuit's prayer for relief first to see exactly what the plaintiff is asking for, and, for legal research, to look for prior settlements in similar cases to gauge likely outcomes.
- The Paragon Coin settlement, used as a comparison, required the company to stop violating securities laws, pay a $250,000 penalty, and set up claim forms so buyers could be repaid, with the SEC monitoring claims. Hogan says it does not create precedent on whether XRP is a currency.
- Hogan notes that stare decisis means future courts could rely on a Ripple ruling about 2013-14 XRP sales under the Howey test, but he argues this would not automatically bind other coins.
- He says Ripple reportedly still holds almost 60 percent of XRP, and a court could bar it from releasing those coins; he raises this as an open question and jokingly says if someone answers it to his satisfaction, he'll probably start buying XRP tomorrow.
- Hogan admits he cannot predict XRP's price impact and asks viewers with deeper knowledge of Ripple and XRP to answer that question.
Bottom Line
The case's outcome may matter more for Ripple's future conduct and money than for a broad legal ruling on XRP, and the real legal clarity on token status will likely take years of litigation.
