On Twitter, Bill Morgan commented on an interesting moment in the lawsuit.
On Twitter, lawyer Bill Morgan commented on an interesting moment in the lawsuit. He noted:
It was surprising to me that the SEC’s own expert conceded that since mid-2018 onwards that Bitcoin and Ethereum price movement can explain as much as 90% of XRP’s price movement.
Yet the narrative that Ripple’s large percentage holding of XRP means the XRPL is centralised and XRP is a security persists.
But if the SEC’s expert is correct you would need to posit that Ripple is allowing in some way XRP’s price to be controlled by price movements of Bitcoin and Ethereum to maintain Ripple is controlling the price as a centralized actor.
That however would be an untenable proposition for several reasons. For one thing, most other cryptos’ prices are similarly influenced by moves in the market price of Bitcoin.
Lastly, the volume of all Ripple sales since 2013 has been a tiny percentage (less than 1%) of total market sales of XRP.
Further, the SEC in its SJ motion asserts that Ripple has taken several measures to support the price of XRP not increase it. The SEC doesn’t say whether these measures worked.
The SEC through its expert is trying to show Ripple’s announcements influence XRP’s price not to prove the XRPL is centralized but to prove XRP buyers and holders expect profits from Ripple’s efforts.
Paradoxically the SEC may be correct about investors relying on Ripple’s efforts but not because of Ripple’s business efforts or sales of XRP but it’s legal efforts defeating the SEC’s lawsuit should it be successful.
Not the kind of efforts the court in the Howey case had in mind.