The legal battle between Ripple Labs and the US Securities and Exchange Commission (SEC) over the classification of XRP as a security is becoming increasingly complex.
Recent developments have led two federal judges to challenge Judge Torres' earlier decision to classify #XRP as a non-security on exchanges and a security for institutional sales. That decision is now being questioned in a lawsuit involving #Coinbase and Terraform Labs.
Specifically, the classification of XRP as a security is based on the Howey test, which is the legal test used to determine whether an asset qualifies as an investment contract and therefore a security under the securities laws. The test includes four key criteria: investment of money, expectation of profit, joint ventures and reliance on the efforts of others.
In his March 31 tweet, Gasparino said that two federal judges, including Judge Rakoff, who is considered an authority on corporate law, questioned the reasoning behind Judge Torres' #Ripple decision. Gasparino also noted that while it remains to be seen whether the decision will be reversed and XRP will be declared an unregistered security, "there are indications that (Judge Torres') legal analysis is flawed.
Interestingly, Pundit reported a day earlier that securities lawyers also believe the federal judge's ruling against Coinbase will serve as a cautionary tale for XRP holders. " Judge Torres' analysis against Ripple will likely be overturned by the Federal Court.
Meanwhile, these legal challenges have affected the price of XRP, which has been trading in a narrow range for the past 690 days or so. However, XRP is showing bullish strength, forming higher lows and indicating the potential for accumulation in the current support area.
Additionally, whales holding between 10 million and 100 million XRP tokens added 190 million XRP to their assets between March 27 and April 1, according to Santiment data.
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