The past few days have seen more cryptocurrencies being sued by the Security and Exchange Committee over the fact that they should be classed as a security. This lingering debate has moved to the corridors of the Ripple network, with some people claiming that the crypto should be classed as a security. A lawsuit has been filed against the network by an investor who lost most of his savings to the network. It is said that the cryptocurrency platform violated all the federal and state security laws. The lawsuit was filed on Thursday and the investor was represented by James Copeland an attorney in San Diego. According to James Copeland, the investor is suing the network for all investors who purchased XRP tokens.
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Generally, the US federal and state security laws stipulate that all securities must be registered under the security and exchange committee and it is stipulated that for any financial instrument to be classed as a security, they must have taken the Howey test. This test was derived from the 1949 case which was filed and stamped by the supreme court. According to the 1993 Security Act, it is mandated that any financial instrument which involves the Investment of a reasonable sum of money and those who have invested have the expectation that they would make a profit from holding the instrument. If the profit that would be made would depend on a group of identifiable people, then it should be identified as a security. The lawsuit filed according to the attorney is of the opinion that the Ripple XRP ticks all these boxes.
Most people have argued against XRP, claiming that the token should be classed as a security. They are of the opinion that it should be classed as a security because of the way it was launched and the different type of ICO that was done. Some are of the opinion that the crypto should be termed a security and should be registered under the security and exchange committee because people who bought these tokens were silently betting on the fact that the value of the crypto would rise in the future. According to the 1993 security law, these types of financial instrument should be classed as a security because they passed the security test.
Some have argued in favor of the token, arguing that the crypto is a fully decentralized platform which eliminates all third-party interferences. Unlike securities, the Ripple network does not have a central authority which controls the general affairs of the network. According to the development team, the network is fully decentralized and so should not be regulated by any regulatory agency.
We are yet to know the hearing and progress that have been made as regards the case that was filed. We cannot fully say whether the Ripple XRP is a security or not but if it is a security, then it should be registered under the security and exchange committee but if it is not then it should be left to operate without regulations.