The Crypto-verse is elated after the Director of The SEC’s Division of Corporate Finance, William Hinman, said that Ethereum (ETH) is not a security based on how it is structured in a decentralized manner. Mr. Hinman said that:
When we think about how Ether today is operating, at least, we see a highly decentralized network, not the type of centralized actor that characterizes securities offerings. In its current state, we don’t see value regulating it.
ETH joins Bitcoin (BTC) as the only two coins the SEC has openly excluded from being classified as securities. This then brings us back to the other discussion as to whether Ripple (XRP) fits the bill of being classified as a security.
There is also a pending Lawsuit against Ripple that was filed by a disgruntled trader. The plaintiff in the lawsuit, purchased 650 XRP on January 5th and later sold the entire amount on January 18th sustaining a 30% loss due to XRP dipping in value during the same period. The plaintiff claims that he did not expect to lose money due to the promotional practices of Ripple’s parent company.
In response to the above lawsuit claim, Brad Garlinghouse responded via an interview with CNBC that:
Whether or not XRP is a security shall not be dictated by one lawsuit. The SEC is the governor of that. I think it is very clear that XRP is not a security. It exists independently of Ripple the company. If Ripple, the company shut down tomorrow, XRP will continue to exist.
Ripple’s Chief Market Strategist, Cory Johnson, also echoed Garlinghouse’s view when he explained to CNBC that:
We absolutely are not a security. We don’t meet the standards for what a security is based on the history of court law. We’re 100 percent clear, it’s not a security. We don’t meet the standards.
In conclusion, the declaration by the SEC that Ethereum is not a security, makes the case that Ripple (XRP) is also not a security. Brad Garlinghouse and Cory Johnson have clarified this on numerous occasions. This means that the pending lawsuit against the parent company, Ripple, stands on a shaky foundation moving forward.