A lawyer has pointed out two “bombshells” dropped by the magistrate judge in the ongoing lawsuit between the U.S. Securities and Exchange Commission (SEC) and blockchain payments tech provider Ripple.
In a YouTube video published Saturday, attorney Jeremy Hogan, who is not involved in the case, said that Judge Sarah Netburn interrupted the discussion to apparently suggest the view that the XRP cryptocurrency may not be a security as the SEC claims.
“My understanding about XRP is that not only does it have a currency value but it has a utility and that utility distinguishes it from bitcoin and ether,” the judge said, according to Hogan.
This matter is at the heart of the SEC’s case against Ripple, since the regulator claims XRP had been sold by the company and its executives without either being registered as a security or the firm seeking exemption.
“No matter what the SEC may try and argue, a currency and a security are, by definition, in opposite … These are two different things,” Hogan said. He added that the judge offering the view that XRP has utility is “exactly what Ripple wants the court to be thinking.”
Netburn’s comments came in a virtual hearing, observed by Hogan, over the SEC’s attempt to obtain personal financial information of Ripple CEO Brad Garlinghouse and Executive Chairman Chris Larsen.
The second “bombshell,” said Hogan, came as Netburn questioned whether “everyone who sold XRP – including you and me – are selling illegal securities” based on the SEC’s prior argument. The SEC attorney responded by saying that, under Section 4 of the Securities Act, only Ripple and its affiliates (meaning employees, Hogan said) could be accused of illegal sales.
This being the case, exchanges who have stopped selling XRP since the SEC action could now potentially relist it, according to Hogan, though he stressed he wasn’t offering legal advice.
Netburn is not the primary judge in the case, however she assists District Judge Analisa Torres with aspects of the case such as discovery and mediation.
“If I’m Ripple, I’m feeling pretty good that my mediator and consulting summary judgement judge just said on the record what I essentially argued in my pleadings,” Hogen said.
There was no official court documentation on the hearing available at press time.
