The long-running battle between Ripple and the US Securities and Exchange Commission (SEC) has taken yet another turn in its proceedings.
Now, the SEC has made an addition of more virtual currencies to its securities list.
The Howey test is a criterion used to assess whether a trade should be classified as a security or an investment contract and is also used by the SEC on financial investments.
Investors put their funds or other assets into a business or organization with the expectation of making a profit. Additionally, these earnings must result from the publisher’s actions; investors cannot impact them.
Meanwhile, the XRP lawyer has raised his voice and is warning crypto community supporters and Congress, calling SEC’s move an illegal expansion of the Howey Test.
Referring to the current SEC vs Ripple dispute, John Deaton, XRP holder’s lawyer is warning the crypto traders to closely watch SEC’s latest developments. Deaton also spoke about the SEC’s recent discussion in the summary judgment against the LBRY.
As per John Deaton, Gary Gensler is heading towards an unlawful expansion of the law. Broadly stated, it may be claimed that the purchaser also anticipates a profit, making it a security. Deaton emphasized that the judge would give a decision in the coming months.
The allegations made by the SEC about the XRP cryptocurrency in the Ripple Lawsuit are brought up by an attorney for XPP. He said that, according to the agency, XRP represents all of Ripple’s operations- but the token itself represents the agreement between the investor and the company.
Further, Deaton points out that if the court approves this move, crypto traders will be in trouble.
The SEC implied that the asset’s value would not be important in the case. It can be said that a customer who purchases a security to utilize it, anticipates a rise in its price.
The SEC is clear that cryptocurrency investors can invest their funds without the involvement of the promoters.