On Friday, January 20, 2023, Ripple's Chief Cryptographer & Chief Technology Officer (CTO), David Schwartz, explained why XRP should be considered a commodity.
The SEC announced on December 22 2020, stating that it had "filed an intervention against Ripple Labs Inc. and two of its execs, who are also major security holders, accusing that they raised more than $1.3 billion with an unauthorized, current digital asset securities offering."
Garlinghouse made the following statement on CNBC's "Crypto World" on September 23 during an interview (1).
"It is imperative that you keep in mind that 99.9% of all XRP trade has nothing to do with Ripple, the corporation. When you say, "Okay, XRP is a security," what exactly are you referring to? When they first began, I remember saying something to the effect of, "A security for what company?" Who is the one who owns it? There does not appear to be an investment contract, as far as I can tell...
"If you get beyond the investment contract, which I believe is challenging, across the Howey Test, you have to satisfy all three points, and in the instance of the XRP case, you can't meet all three prongs for sure. It's going to be very difficult. And as a result, we believe that the court will recognize that the law is very plain, the facts are very obvious, and this is really a tremendous overreach on the part of the SEC trying to grab control of that ambiguity that has existed...
"I feel that the 'Ripple Test' is going to be something that we look at in the future. There are a lot of facts and situations that might be one of a kind, but in the case of Ripple and what the SEC is attempting to do, I do think that it's just the SEC trying to exceed the legislation.
Ripple is a Commodity
It all started the day before yesterday when a crypto currency enthusiast who goes by the Twitter handle "Jay'V" warned (2) that a settlement that permits Ripple to continue operating "with no adjustments" throws up a new universe of difficulties.
Or are you all going to continue to try to make excuses & comparisons due to your biases & create examples while leaving out certain aspects surrounding #ripple & #xrp.. like I said, a settlement that allows ripple to carry on “with no changes” opens up a new world of problems..
— Jay’V🪬 (@JayVTheGreat) January 20, 2023
Schwartz then questioned him:
"What complications do you foresee resulting from a judgment that says the sale of a commodity when there are no post-sale duties of the seller to the purchaser is not an "investment contract"?"
After that, "Jay'V" revealed to him:
"If the court decides in a manner that clearly expresses that ripples sales really aren't security exchanges then it's perfectly acceptable.. but I cannot see that arriving from Gary.. also I presume that with this type of judgment, she must fully crumble how #xrp makes up a commodity.
The following are the reasons, according (3) to Schwartz, why he considers XRP to be a commodity:
"XRP is a raw product that trades in commerce, and one XRP is considered as comparable to every other XRP. This is because XRP is a decentralized currency." That sums up the meaning of "commodity" very well, doesn't it? There is no connection between the legal duties of other parties to XRP holders and the value of XRP.
