Following the split decision in the SEC v. Ripple case, Kathryn Haun, founder and CEO of cryptocurrency-focused investment firm Haun Ventures, shared her insights on the matter. Haun, who has over 6 years of experience as a Coinbase board member and over 11 years of experience working at the U.S. Department of Justice, consulted with legal colleagues and believes that the court’s decision distinguishes XRP itself from certain specific currencies. XRP transactions are reasonable.
Haun said the court’s ruling is consistent with the industry’s position in an upcoming case against the SEC. She argued that tokens themselves are in no way “investment contracts.” Instead, only binding contracts that impose post-sale obligations on sellers can be considered investment contracts. Therefore, tokens traded on exchanges or secondary markets rarely qualify.
Haun compared tokens to other commodities such as orange groves, whiskey barrels, condos and even beavers, noting that while these can be the subject of investment contracts, they are not themselves investment contracts or securities.
Haun also discussed Ripple’s argument for the “essential ingredients” test, which suggests that a contract that imposes post-sale obligations on the seller and allows the buyer to share in profits must exist before the Howey factors can be considered. She believes the Supreme Court will eventually adopt a version of this argument, rejecting the SEC’s assertion that an “investment contract” can exist without any contract.
While Haun believes the court’s decision is generally favorable to the industry, she is skeptical of the SEC’s desire for legal clarity. She believes the SEC could benefit from the current chaos, and that losing these issues on appeal could jeopardize its entire enforcement agenda.
Haun also stressed that these complex legal issues highlight the need for legislative intervention. She believes that the decision in the Ripple case highlights that existing laws and precedents are not enough to address the policy concerns raised by the technology. She called on Congress, rather than unelected institutions, to make such major policy decisions.
In conclusion, Haun sees the Ripple decision as a catalyst for positive legislative change in Washington, D.C. She believes that as more cases are decided and more courts engage with the broader principles at stake, the law will continue to evolve to better suit the unique challenges posed by the crypto industry.
